Kibo Energy PLC
Annual Report 2017

Plain-text annual report

AnnuAl RepoRt & Accounts 2017 2017HigHligHts 2017 Mbeya Coal To Power ProjeCT (Coal) • Completion of Integrated Bankable Feasibility Study • Memorandum of Understanding signed on strategic regional collaboration and reciprocal supply of materials agreement with Mbeya Cement Ltd • Opening of two Kibo funded classrooms in Songwe Region as part of the Company’s corporate social responsibility programme in southern Tanzania • Written re-affirmation of the Tanzanian Government’s support for the MCPP amid significant reform of the Tanzanian mining legal and regulatory framework • Transmission Line contract for the evacuation of power from the MCPP power plant awarded to SEPCO III • Environmental and Social Impact Study certification awarded to MCPP following a lengthy process of multi- stakeholder engagement • Signing of Memorandum of Understanding between the Company and TANESCO (state electricity supply company) on the Power Purchase Agreement (announced in February 2018) • Rationalisation of early project portfolios as part of process in moving the Company from being a multi- commodity early stage explorer to a regional energy producer HaneTi ProjeCT (ni-Cu-PGM) • Haneti maintained in good standing which the Company continues to seek and evaluate joint venture and/ or other funding proposals to enable it carry out the next stage of exploration iMweru & lubando ProjeCTs (Kibo Holds 57% inTeresT) • Projects divested to AIM listed Katoro Gold PLC who raised £1.5 to advance completion of Definitive Mining • Feasibility Study at Imweru Initial drill programme at Imweru expanded to 3,410 meters (31 holes) and completed ahead of schedule and within budget • Environmental and Social Impact Study at Imweru significantly advanced with completion of initial fieldwork and approval of report on terms of reference and scope of work by relevant Tanzanian environmental body • Mining Licence Application for Imweru submitted • Lidar mapping survey completed to generate detailed digital terrain model of proposed Imweru mine site • Resource Update, Pit Optimisation and Mine Design nearing completion for Imweru for completion of mining Pre-feasibility Study new ProjeCTs • Memorandum of Understanding signed to acquire an 85% interest Makesekwa Coal Independent Power Project (MCIPP) in Botswana from Shumba Energy Limited • MCIPP will comprise a 300 Mt thermal coal deposit with a plan advanced to scoping stage by Shumba to construct a mouth of mine power station to export power to South Africa • MCIPP transaction completed in April 2018 Kibo AnnuAl REpoRt 2017 C ont en ts Chairman’s Statement Review of Activities Annual Financial Statements for the 12 month period ended 31 December 2017 Notice of Annual General Meeting Form of Proxy IV VII XVI XVII XX Programme for 2018 - 2019 Inside Back Cover I KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 On the path tO becOming a regional afri Can energy pr odu Cer Botswana is ideally located with abundant coal to help address Southern Africa’s current power deficit and so support the rapid economic development of the region KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 II Imweru & Lubando (GOLD) Haneti (NICKEL, PGE & GOLD) Tanzania Mbeya (COAL TO POWER) Mabesekwa (COAL TO POWER) Botswana III KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 C ha i rm an ’s statement Dear Shareholders, I look forward to the remainder of 2018 to see the conclusion of the project’s development and 2017 was a challenging year for Kibo as we pushed financing phases and the start of the construction ahead with our efforts to complete a Power Purchase phase on this piece of critical energy infrastructure Agreement (PPA) for our flagship Mbeya Coal to that will considerably benefit the socio-economic Power Project (MCPP) amid significant upheavals development of southern Tanzania. and changes in the Tanzanian mining policy and regulatory environment. As might be expected, Management’s success in bringing the MCPP to an these events have impacted on our anticipated advanced stage of development, the experience time line to finalise a PPA with the Tanzanian accumulated in the process and the strategic Government and complete Financial Close on the relationships developed have motivated the board project. I am delighted to reflect that despite these to re-orientate the Company towards becoming delays, at the end of 2017, the Tanzanian Government a regional energy producer in Africa. This marks reconfirmed in writing its strong support for the a natural evolution in our strategy over the last MCPP as an important component of its national five years from being an early stage explorer energy strategy and undertook to expedite with a diverse commodity portfolio to a company finalisation of the PPA. As you are no doubt aware on the brink of being a focused coal to power this commitment was backed up when we signed generator. Supporting this strategy, we announced a Memorandum of Understanding (MOU) with the a Memorandum of Understanding in November Tanzanian State Electricity Company (TANESCO) in 2017 on terms for acquiring an 85% interest in February 2018 as a preparatory step to finalising a the Mabesekwa Coal Independent Power Project PPA. Management is now in advanced negotiation (MCIPP) in Botswana. This transaction, which has with TANESCO on the finalisation of the full PPA. recently been completed, marks the first step in expanding Kibo’s footprint in the energy sector in The publication of the MCPP Integrated Bankable Africa and realising its strategy of transforming the Feasibility Study (IBFS) at the start of 2017 was Company into a regional African energy producer. the culmination of 3 years work by Kibo and the I am proud to mention the award of Innovative most important milestone in the development Project Development Deal of the Year 2017 to the path for the project to date. The positive results Company for the MCPP by our strategic partner GE from the IBFS signalled a major de-risking of Electric, a strong endorsement of our capability to the project and confirmed it as an attractive successfully implement this transformation. investment opportunity that should ensure that it can be brought to Financial Close once the PPA It is worth reflecting on the fact that the power has been agreed with the Tanzanian Government. sector in Sub-Saharan Africa is significantly KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 IV Mineralised Drill core Imweru 2017 underdeveloped, regarding energy access, installed in drill sample dispatch for analysis, Katoro’s work capacity, and consumption. This is a major limiting towards completing a Definitive Mining Feasibility factor on sustaining economic growth and fulfilling study continued at pace. It submitted the Mining the economic and social promise of the region, and Licence Application for Imweru in September and Africa in general. Sub-Saharan Africa contains 13% of was granted approval for the scope and terms the world’s population but 48% of the share of the of reference of the Imweru Environmental Social world’s population without electricity (McKinsey Impact Study by the relevant Tanzanian authorities Special Report 2015). In this context, we see an in October. The drilling results have now all been attractive opportunity for Kibo to position itself as received and the company is busy preparing an a regional power producer to facilitate and share in updated gold Mineral Resource Statement and a the economic development of the region. The MCPP Prefeasibility Study. and the MCIPP share many similarities and we are well placed to harness the synergy between the We continue to hold our Haneti (Ni-Cu-PGM) project projects across all aspects of their developments. as an important pipeline project in the rationalised Kibo licence portfolio. Unfortunately, we did not During 2017 we completed the divestment of our get the opportunity to complete our initial planned resource based gold assets, Imweru and Lubando, drilling programme on the project during 2017 in northern Tanzania to AIM listed Katoro Gold PLC but we continue to investigate funding options to in which we retain a 56.7% interest. This divestment commence this work as soon as possible. not only supports our strategy to reposition Kibo as a standalone energy company but enhances On the corporate front, we continued our relationship our shareholders opportunity to realise value from with Sanderson Capital Partners (”Sanderson”), who these assets within a separately financed, dedicated hold a minority interest in the MCPP, in arranging gold company. Katoro is singularly focused in the innovative funding arrangements to advance the near term on bringing the Imweru Mineral Resource MCPP. The terms of the forward payment facility into production and I believe its progress towards agreed in December 2016 were mutually revised meeting this objective during 2017 was impressive. in September 2017 allowing for an extension to The company commenced a drill programme the drawdown schedule and part re-payment of on Imweru immediately after AIM admission in funds already drawn by the issue of a convertible May 2017 which was subsequently expanded and loan note to Sanderson which it immediately completed ahead of schedule and within budget converted to Kibo shares. Convertible loan notes in July 2017. Despite the drilling coinciding with were also issued on the same date by the Company the implementation of major mining regulatory in payment of awards under the Company’s changes in Tanzania which caused some delays Management Incentive Scheme and to one high net V KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 MCPP Power to be evacuated to Tanzanian grid (stock photo) worth individual. A small placing of 277,768 shares plant, advancement of the MCIPP in Botswana and at a price of 4.75p, per share, was also completed in construction of a gold mine at Katoro’s Imweru settlement of invoices from service providers in lieu project. of cash during 2017. Finally, I wish to thank our CEO Louis Coetzee and his management team for their dedication in skilfully guiding the Company through the challenges of 2017, particularly in relation to the recent changes Christian Schaffalitzky to mining legislation and regulation in Tanzania. I Chairman look forward with optimism to 2018 and beyond Date: 12 June 2018 for the construction of the MCPP mine and power MCPP Power Purchase Agreement Planning Session February 2018, Stellenbosch, South Africa KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 VI reV ieW o f aCtiVities IntroductIon construction of this 300 MW coal fed thermal power plant in southern Tanzania. This progress The following sections provide a summary of the was made during a period in which the Tanzanian principal activities carried out by the Company on Government implemented substantial changes to its projects during 2017. In line with its strategy its policy and regulations for mining and energy for existing projects, Kibo continues to evaluate, development projects in the country. These changes prioritise and rationalise its project licence commenced in January with a major restructuring portfolios in order to focus resources on those areas of the state electricity utility company, TANESCO, the Company believes offers the best opportunities with whom Kibo were already at an advanced stage for exploration and development success. Kibo had of discussion on a Power Purchase Agreement (PPA). disposed of its Imweru and Lubando projects to Regrettably, this interrupted focused engagement Katoro Gold PLC (“Katoro”), effective 23 May 2017 for with TANESCO while its board was being replaced the consideration of £3.66 million settled through and the semi-state utility restructured. In early the issue of shares in Katoro, resulting in retention July 2017, the Tanzanian Government announced by the Company of a 57.1% (currently 56.7%) indirect wide ranging changes to the legal framework beneficial ownership of the Imweru & Lubando governing the natural resources sector in the projects. Furthermore, since year end Kibo has country. These changes had the most negative concluded the acquisition of an 85% interest in financial and operational impact on existing the Mabesekwa Coal Independent Power Project mining operations in Tanzania who were exporting situated in Botswana, in order to further advance mineral products under existing legislation. In the Company’s broader strategy to position itself this respect, the impact on Kibo is not as severe as a strategic regional energy company focused on as it is not yet a mineral exporting or revenue tackling the acute power shortage, particularly in generating company. Furthermore, the MCPP is Southern Africa . operatIonal coal Mbeya Coal to Power Project (MCPP) During 2017 Kibo continued to make steady progress on moving the MCCP, towards Financial Close in preparation for the commencement of recognised by the Tanzanian Government as a key piece of energy infrastructure development where the primary consumer for the mined coal will be the associated thermal power plant and thus it will be an in country project providing for much needed additional electricity generation capacity in Tanzania. Despite the changing mining regulatory environment in Tanzania during 2017 noted above, VII KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 Regional distribution of Kibo Projects in Tanzania Kibo made further steady progress on the MCPP • Indicative post-tax payback: development. In January, the Company announced the completion of a key document, the Integrated Bankable Feasibility Study (IBFS) on the project. • Equity Payback period: 4 to 5 years • Debt Payback Period: 11 to 12 years The highlights included: • Sufficient additional coal resources available from the Mbeya Coal Mine to expand the • Total capital requirement for the integrated power station to more than double the current project reduced 21.1 % from the original design size and plant life. In this regard, the integrated prefeasibility study ( IPFS) figure; plant design already makes provision for a • Indicative MCPP total revenue over an assumed 25-year life of project (Note: the final life of project will be fixed by the final PPA) of approximately US$7.5 to US$8.5 billion; • Indicative post tax Equity IRR between 21% and 22%, an increase of 11% on the indicative IPFS post-tax Equity IRR, based on the following conservative debt assumptions: future second stage expansion to 600MW (i.e. a further 300MW of capacity with the potential for a third stage expansion of a further 400MW in the long term); • Technical and environmental risk assessment confirmed construction–ready state of the project, with no ‘red flags’ on the environmental side, bearing in mind the clean coal nature of the plant design, and • Debt tenor: 12 years; • The MCPP can be constructed and • All in interest rate (post construction): 10%; and DSRA facility: 6 months • Post tax Project IRR ranging between 14.7% and 16%; and commissioned within the previously projected schedule duration of 36 months. In March 2017, the Company announced the signing of a Memorandum Of Understanding (“MOU”) with KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 VIII southern Tanzania based cement manufacturer, departments and the implementation of new Mbeya Cement Ltd, to develop a strategic regional mining legislation. collaboration and reciprocal supply of materials agreement. This was a first step in the Company’s While these meetings with the Tanzanian strategy of developing a diversified internal Government were on-going, two important market for its coal product while simultaneously operational milestones for the MCPP development developing synergistic relationships with existing were concluded. Firstly, at the end of August, local industries and supporting regional socio- Kibo conditionally awarded the Transmission economic development. The MOU commits the Line contract (for the evacuation of power from companies to explore business collaboration the MCPP power plant to the Songwe District whereby Kibo will supply Mbeya Cement with coal, sub-station) to SEPCO III following an in-country fly ash and power for its cement plant while Mbeya line survey and a bid review process conducted Cement will supply cement for the construction of by Kibo and Tractebel Engineering. Secondly, in the Mbeya coal and power plants. The companies October 2017, the Tanzanian Government granted also committed to collaborate on seeking adequate an Environmental and Social Impact Assessment supply of limestone for their respective operations (ESIA) certificate to both the MCPP coal mine and to explore how they could work together and power plant. The awarding of this certificate with regional development partners to maximize concluded a lengthy process of field studies, multi- the socio-economic benefits of their operations stakeholder engagement and detailed critical for the region. Also in March 2017, the Company review by the Tanzanian authorities and represents announced the opening of two new classrooms a robust social and environmental licence for Kibo at Meheza and Namkukwe villages in the Songwe to develop and operate the MCPP. Region near the MCPP site whose construction it had funded as part of an on-going commitment to The final critical agreement for the MCPP to support education in the region. move to Financial Close, a PPA with the Tanzanian Government, reached an important interim stage Company activity in the second half of 2017 in February 2018 with the signing of an MOU was dominated by extensive meetings with MCPP Project tenements at 31st Dec 2017 Tanzanian Government bodies and other MCPP stakeholders. These meetings were primarily focused on agreeing the scope and timeline for the negotiation of a PPA for the MCPP. Significant encouragement for this process was received by Kibo from the Tanzanian Government (Ministry of Energy and Minerals) at the start of June 2017 where it provided written reconfirmation of its support for the MCPP asking for the project to be expedited. This timely boost to the MCPP was reassuring as it came at a time of on-going policy reviews, management changes within key Tanzanian Government IX KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 Mabeskwa Coal Project Location between the Company and TANESCO which sets mined and USD 0.0225 per kilowatt hour of power out clear guidelines, deliverables and timelines produced should the project go into production. for the conclusion of the PPA. These included a The MCIPP is in north eastern Botswana and commitment by the Tanzanian Government to comprises a 300 Mt subset of a 777 Mt Coal expedite the negotiation process to finalise a full Resource (Mabesekwa Coal Resource) for which a PPA which it had previously agreed to complete by scoping study on a linked coal fired thermal power the end of Q1 2018 although this will clearly now plant has already been completed by Sechaba. take a little longer. The project has many similarities with Kibo’s more advanced MCPP project and the synergies Mabesekwa Coal Independent Power Project therein across economies of scale in equipment, (“MCIPP”) execution, project finance should benefit the rapid The Company announced the terms for the advancement of the MCIPP. Additionally, the key acquisition of an 85% interest in a company strategic partnerships that Kibo have established holding a Botswanan coal-to-power project, the on the MCPP can be leveraged to the MCIPP. Mabesekwa Coal Independent Power Project (MCIPP), in November 2017. The project interest The MCIPP is 64 km south-west of the city of was acquired from Sechaba Natural Resources Francistown and is located about 100 km and 200 Limited (“Sechaba”) a subsidiary of Shumba Energy km respectively from the Zimbabwean and South Limited (“Shumba”), a regional power producer African borders. Critically, it is close to road, rail, air in the southern African region for 153.71 m and power grid links and ideally located for the new shares in Kibo in an all share transaction evacuation of power to the South African market. which recently completed in April 2018. Under The urgent demand for additional baseload the terms of the acquisition, Sechaba retains power generation in South Africa is reflected modest production royalties from the Company in the country’s so called Cross Border Project holding the MCIPP of USD 0.50 per tonne of coal initiative where the South African Government is KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 X Katoro’s Imweru & Lubando Projects at 31st Dec, 2017 encouraging independent power producers (IPPs) Kibo plans to continue with development plans in neighbouring countries to export base load already started by Sechaba for the construction power to the South African grid. The South African of a coal mine and a linked thermal power station Government has earmarked 3,750 megawatts to for export of power into the South African market. be generated from coal from cross border projects. As already noted, the South African Government The 1Mabesekwa Coal Resource (777 Mt, of which the MCIPP holding company has excised 300Mt) is is actively encouraging the import of power from IPPs located both within and outside South Africa to guarantee its future electricity supply security. located within the Foley Coal Field located at the Kibo’s initial work will be to produce a new Coal north-eastern end of the coal bearing Kalahari Resource statement for the 300 Mt subset that Karoo Basin which covers about 70% of Botswana. the MCIPP holding company has excised from the It comprises up to 5 flat lying coal seams with existing Mabesekwa Coal Resource and use it as an average thicknesses of 3-6m although locally input to definitive feasibility studies on a combined individual seams can be much thicker. coal mine and power plant. Under the terms of the acquisition agreement with Shumba, Shumba The coal occurs at depths of 50-60 metres, from granted Kibo rights of first refusal on any energy the surface and is accessible to open pit mining. projects Shumba may pursue within six years The coal is classified as sub-bituminous in rank of the completion date of the transaction, while and is ideal for thermal power generation. Shumba Kibo provided similar rights to Shumba over coal Energy has already carried out conceptual studies export projects that Kibo may pursue. This will put and technical work on the coal to power project Kibo in a good position to implement its strategy including a prefeasibility study for the mining of building a diversified portfolio of strategically of the Coal Resource, a scoping study on the located energy assets across Africa. power plant and advanced engagement with the relevant Botswanan and South African licencing 1 Reference should be made to the Company’s RNS authorities, government departments and other announcements of the 30th November 2017 and the 3rd key stakeholders in the project. Shumba has also April 2018 for full details on the Mabesekewa Coal Resource, a completed an Environmental and Social Impact Study on the mine and power plant for which it has received government certification as well as Competent Person’s statement and the Company’s attributable interest. The Company confirms that there has been no material change to the Mabesekwa Coal Resource since the Coal Resource estimate was first published as part of the Company’s RNS of having secured water and land use permits. the 30th November 2017. XI KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 Imweru Phase 1 Drill Plan 2017 Gold Imweru & Lubando During 2017, Kibo completed the divestment of its two gold projects, Imweru and Lubando, to a production rate indicated and the opportunity to significantly increase this should further resource delineation drilling prove successful. The current JORC-compliant gold 2Mineral Resource at Imweru stands at 11.6 Mt at 1.38 g/t (515,110 oz). gold focused AIM listed company, Katoro Gold Following the admission to AIM in May, Katoro PLC to release value in them for shareholders. This began an Initial drill programme at Imweru which divestment was accomplished by means of the it completed in July for a total of 31 holes and 3,410 transaction with Opera Investments PLC whereby metres. The purpose of the drill programme was to Opera acquired the Imweru and Lubando projects provide samples to support the resource update, from Kibo for the issue of 61 million new shares mine design, extraction process and pit design in Opera to Kibo thereby making Kibo the largest components of a prefeasibility study, an interim shareholder in Opera with an initial shareholding step in the completion of the DMFS. of 57.1%. As part of the transaction, Opera was renamed Katoro Gold PLC and admitted to AIM Unfortunately, the drill programme execution on 23 May 2017. AIM admission was accompanied coincided with major changes in Tanzanian by a placing of £1.5 million which is being used to mining legislation, one of which resulted in advance gold mine development at Imweru. stricter regulations and procedures around export of drill samples for analysis. While this caused Katoro’s near term objective is to complete a some delay, Katoro quickly adjusted to the new Definitive Mining Feasibility Study (“DMFS”) at regime. Samples for gold assay were dispatched Imweru and, contingent on a positive outcome, to to a reputable laboratory in Tanzania thus construct a gold mine with a near term production avoiding any delays under the new export rules. of 50,000 oz per year. An initial scoping study Drill samples for metallurgical and geotechnical by Kibo in 2015 demonstrated the potential for analyses were exported to laboratories in South a mine developed at Imweru, with the initial Africa as no facilities for such analyses are KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 XII available in Tanzania. The export of these samples personnel and consultants are busily working on was delayed somewhat as Katoro took time to the completion of a Mineral Resource update at comply with the new export regulations and Imweru and the completion of a pre-feasibility was not fully completed until September. During study, an interim step to the completion of the the second half of 2017, Katoro was granted DMFS. The prefeasibility study has been greatly certification and approval from the relevant enabled by a Lidar survey completed during Tanzanian environmental authority for the terms November 2017, the results from which has allowed of reference and scoping report for the Imweru an accurate digital terrain model of the proposed ESIA. This enabled the final phase of the ESIA study Imweru mine site be constructed. This will greatly to proceed. During the same period, Katoro also facilitate, resource updates, pit optimisations and submitted a Mining Licence application for the mine designs to be concluded with a high degree development of a mine at Imweru. These two of accuracy. critical elements for the DMFS were accomplished about two months ahead of schedule and as a result of the rapid completion of the initial drill programme and follow-up ESIA related fieldwork Katoro also plans to develop the Lubando project which contains a current JORC-compliant 2Mineral Resource of 6.8 Mt @ 1.10g/t (239,870 oz.) and and preparatory work by Kibo operational staff evaluate the other earlier stage mineral licences and consultants who are still working on behalf of with excellent gold discovery potential that it Katoro following its admission to AIM in May 2017. holds. These offer Katoro the opportunity to Katoro received results from all the sample streams of northern Tanzania (Lake Victoria Goldfields) at the end of September and Katoro’s technical where a number of large gold mines are already in expand its gold resource inventory in this part Haneti showing aeromagnetic interpretation & drill targets XIII KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 Nickeliferous laterite scree - Haneti production e.g. Bulyanhulu and Geita. In addition strike length where the potential for the outlining to Lubando, the immediate exploration interest of additional drill targets has been established. is in strong gold-in-soil anomalies west of the The need for an increasing allocation of company Imweru Mineral Resource at Sheba which are at resources to its flagship project, the MCPP, during the drill-ready stage and will be tested as part of 2017 as it approaches Financial Close has meant Katoro’s medium term exploration strategy for the that no field work has been conducted on Haneti area. The greater Lubando project also comprises a during the period. The Haneti Project has no large area of gold prospective exploration ground carrying value in these annual financial statements. both east and west of the existing Lubando Mineral Resource at Pamba and Busolwa respectively. relInQuISHed proJectS 2 Reference should be made to the Competent Person’s Reports contained within Katoro’s AIM Admission Document published on the 23rd May 2017 found on the Katoro website www. Morogoro Gold and Pinewood Uranium Projects The Company terminated, by mutual consent, its katorogold,com for full details on the Imweru and Lubando joint venture agreements with Metal Tiger PLC on Mineral Resources and a Competent Person’s statement. The Company confirms that there have been no material changes to the Imweru and Lubando Mineral Resources since the publication of the Katoro AIM Admission Document. nIcKel Haneti Project these projects during 2017 and relinquished the licence portfolios back to the Tanzanian Ministry of Energy and Minerals. This decision reflects a decision by the Kibo to focus its resources on its development and more advanced projects (and those of Katoro Gold PLC) i.e. the MCPP, Haneti, Imweru and Lubando projects. Morogoro and Pinewood were early stage exploration projects Kibo continued to maintain its Haneti nickel and their higher risk profile was considered project in good standing during 2017 while it seeks not compatible with the Kibo’s current project a suitable joint venture partner or alternative development status and the increased resources funding option to enable it to implement the (financial and operational) required for allocation next phase of exploration. It has a budgeted to its development projects. drill programme prepared for immediate implementation should the appropriate funding corporate become available. Haneti contains two well resolved nickel-copper-PGM targets arising from substantial previous field investigations by Kibo within a large mafic-ultramafic belt up to 80 km On the corporate front the Company continued to manage its funding prudently by taking advantage of the value in its assets, particularly the MCPP, KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 XIV Kibo Management & Consultants - MCPP Field Visit 2017 to source alternative funding opportunities. In to further fund expansion and operational cash this regard, it continued its relationship with requirements. Further details of the directors’ Sanderson Capital Partners Ltd (“Sanderson”) assessment of going concern are given on page by drawing £2 million of the available funding 8. The Company also settled a small number of from its forward payment facility agreed with invoices from current service providers in Kibo Sanderson in December 2016, of which £790,000 shares as well as deferring costs under MCPP had been settled through the issue of shares to related engagement contracts until Financial Sanderson during 2017 with a further settlement Close. These financial arrangements were in 2018 amounting to £565,208 of which possible as a result of strong confidence by all £365,500 was shares. Furthermore, the Company concerned in the Company’s ability to deliver the appointed two new joint Brokers during March MCPP following the strongly positive results from 2018 from which £2.25 million gross was raised the mining and power feasibility studies. Drilling at night – Imweru XV KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 f inanCia l statements KiBo mining plC annual finanCial statements for the year ended 31 deCemBer 2017 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 XVI C ont en ts CORPORATE DIRECTORY DIRECTORS’ REPORT INDEPENDENT AUDITOR’S REPORT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF FINANCIAL POSITION COMPANY STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY COMPANY STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS COMPANY STATEMENT OF CASH FLOWS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS ANNEXURE 1: HEADLINE EARNINGS PER SHARE 1 3 13 17 18 19 20 21 22 23 24 34 56 KIBO MINING PLC CORPORATE DIRECTORY ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 BOARD OF DIRECTORS: Christian Schaffalitzky Louis Coetzee Noel O’Keeffe Andreas Lianos Lukas Maree Wenzel Kerremans Chairman (Non-Executive) Chief Executive Officer Technical Director (Non-Executive) Financial Director (Non-Executive) Executive Director Non-Executive Director COMPANY SECRETARY: Noel O’Keeffe REGISTERED OFFICE: BUSINESS ADDRESS - IRELAND: BUSINESS ADDRESS - TANZANIA: 17 Pembroke Street Upper Dublin 2 Ireland Gray Office Park Galway Retail Park Headford Road Galway, Ireland Telephone: +353 91 511463 Fax +353 91 450018 Email: info@kibomining.com th Floor, Wing A Amani Place 10 Ohio Street Dar es Salaam, Tanzania Telephone: +255 22 2127857 Fax +255 22 2126049 AUDITORS Saffery Champness LLP 71 Queen Victoria Street London EC4V 4BE STOCK EXCHANGE LISTING: London Stock Exchange: AIM - (Share code: KIBO) – Primary Johannesburg Stock Exchange: JSE Alt X - (Share Code: KBO) – Secondary Ireland & United Kingdom SHARE REGISTRARS: Link Registrars Ltd 2 Grand Canal Square Dublin 2 D02 A342 South Africa th Floor Link Market Services South Africa (Pty) Ltd 13 19 Ameshoff Street Braamfontein South Africa PRINCIPAL BANKERS: Allied Irish Banks Plc Tuam Road Galway Ireland 1 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 1 KIBO MINING PLC CORPORATE DIRECTORY ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 JOINT BROKERS: SOLICITORS: SVS Securities Limited 20 Ropemaker Street London EC2Y 9AR Novum Securities Limited 8-10 Grosvenor Gardens London SW1W 0DH As to Irish Law: OBH Partners 17 Pembroke Street Upper Dublin 2 Ireland As to English Law: Druces LLP Salisbury House London Wall London EC2M 5PS As to Tanzanian Law: ENSafrica Tanzania Attorneys 6th floor, International House cnr. Shaaban Robert Street and Garden Avenue PO BOX 7495 Dar es Salaam Tanzania UK NOMINATED ADVISER: JSE DESIGNATED ADVISER: UK PUBLIC RELATIONS: WEBSITE: RFC Ambrian Limited Level 5, Condor House 10 St Paul’s Churchyard London, EC4M 8AL River Group 211 Kloof Street Waterkloof Pretoria, South Africa St. Brides Partners Ltd 3 St. Michael’s Alley EC3V 9DS www.kibomining.com DATE OF INCORPORATION: 17 January 2008 REGISTERED NUMBER: 451931 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 2 2 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 CORPORATE DIRECTORY KIBO MINING PLC DIRECTORS’ REPORT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 JOINT BROKERS: SOLICITORS: SVS Securities Limited 20 Ropemaker Street London EC2Y 9AR Novum Securities Limited 8-10 Grosvenor Gardens London SW1W 0DH As to Irish Law: OBH Partners 17 Pembroke Street Upper Dublin 2 Ireland As to English Law: Druces LLP Salisbury House London Wall London EC2M 5PS As to Tanzanian Law: PO BOX 7495 Dar es Salaam Tanzania RFC Ambrian Limited Level 5, Condor House 10 St Paul’s Churchyard London, EC4M 8AL River Group 211 Kloof Street Waterkloof Pretoria, South Africa St. Brides Partners Ltd 3 St. Michael’s Alley EC3V 9DS www.kibomining.com ENSafrica Tanzania Attorneys 6th floor, International House cnr. Shaaban Robert Street and Garden Avenue UK NOMINATED ADVISER: JSE DESIGNATED ADVISER: UK PUBLIC RELATIONS: WEBSITE: DATE OF INCORPORATION: 17 January 2008 REGISTERED NUMBER: 451931 The Board of Directors present their Annual Report together with the audited annual financial statements for the year ended 31 December 2017 of Kibo Mining Plc (“the Company”) and its subsidiaries (collectively “the Group”). The Board comprises a Non-Executive Chairman, two Executive Directors and four Non-Executive Directors. As the Company evolves, the Board will be reviewed and expanded if necessary to ensure appropriate expertise is in place at all times to support its business activities. The Board is responsible for formulating, reviewing and approving the Company's strategy, budgets, major items of capital expenditure and acquisitions. An agenda and all supporting documentation is circulated to all Directors before each Board Meeting. Open and timely access to all information is provided to all Directors to enable them to bring independent judgement on issues affecting the Company and facilitate them in discharging their duties. At the date of this report, the board of Directors comprised: Christian Schaffalitzky - Chairman (Non-Executive) Louis Coetzee - Chief Executive Officer (Executive) Andreas Lianos - Financial Director (Non-Executive) Noel O’Keeffe - Technical Director (Non-Executive) Lukas Maree - Executive Director Wenzel Kerremans - (Non-Executive Director) Christian Schaffalitzky, BA (Mod), FIMMM, PGeo, CEng, Age 64 – Chairman (Non-Executive) Christian Schaffalitzky is managing director of Eurasia Mining plc a company trading on AIM. From 1984 to 1992, he founded and managed the international minerals consultancy, CSA Group, now CSA Global Pty Ltd. With over 30 years’ experience in minerals exploration, Christian Schaffalitzky was a founder of Ivernia West plc, where he led the exploration and was instrumental in the discovery and development of the Lisheen zinc deposit in Ireland. More recently, he was managing director of Ennex International plc an Irish quoted mineral exploration company, focused on zinc development projects. He has also been engaged in precious and base metal mineral exploration and development in the former Soviet Union and is a former independent director on the boards of Russian companies, Raspadskaya Coal Company and Chelyabinsk Zinc. Louis Coetzee, BA, MBA, Age 53 – Chief Executive Officer (Executive) Louis Coetzee has over 25 years’ experience in business development, promotion and financing in both the public and private sector. In recent years, he has concentrated on the exploration and mining arena where he has founded, promoted and developed a number of junior mineral exploration companies based mainly on Tanzanian assets. Louis has tertiary qualifications in law and languages, project management, supply chain management and a MBA from Bond University (Australia) specialising in entrepreneurship, and business planning and strategy. He has worked in various project management and business development roles mostly in the mining industry throughout his career. Between 2007 and 2009, he held the position of Vice-President, Business Development with Canadian listed Great Basin Gold (TSX: CBG). Noel O’Keeffe, BSc (Hons), Geology, MBA, Age 54 – Technical Director (Non-Executive) and Company Secretary Noel O'Keeffe has over 20 years’ experience in mineral exploration and has worked on a variety of base metal and gold projects in Ireland, Canada, Australia and Africa. Prior to co-founding Kibo in 2008 he worked as a quality co- ordinator with Boston Scientific (Ireland) Ltd, a multinational medical device Company. He also worked part-time for Irish geological services Group, Aurum Exploration Ltd during 2003 and early 2004. During the mid-nineties, he was exploration manager with Ormonde Mining Plc in Tanzania, a Company currently listed on the Irish Stock Exchange and on AIM. Previously Noel was a senior geological consultant with BDA Consultants Limited and worked on both government and private sector contracts. Earlier in his career, Noel worked as a geologist for Burmin Exploration and Development Plc and for its Canadian and Australian subsidiaries. 2 3 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 3 KIBO MINING PLC DIRECTORS’ REPORT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Lukas Marthinus Maree, BLC, LLB, Age 54 – (Executive) Lukas Maree is a lawyer by profession. He has served on the boards of a number of public companies including Goldsource Mines Limited, Africo Resources Limited and Diamondworks Limited that have made significant successful investments in exploration projects in Africa and North America, and has more recently served as the CEO of private investment companies Rusaf Gold Limited and Mzuri Capital Group Limited, both of which have successfully developed and sold mineral projects in Russia and Tanzania in the last seven years. He was also a founder principal of River Group, Designated Advisors to the Listing of Kibo on the JSE, and was responsible for its Canadian office until his retirement from the Group in 2013 to pursue personal interests. Wenzel Kerremans, B. Proc, LLB, LLM, Adv. Dip. Age 60 – (Non-Executive) Wenzel Kerremans is a lawyer by profession with over 25 years’ international legal experience in mining, banking, project finance and international tax, advising clients who have invested in exploration and mining projects in Africa. He has also originated and successfully sold Veremo Holdings Limited a billion ton titaneferous magnetite exploration project for the production of iron and titanium slag. Wenzel is also the principal and director of a gold, graphite and coal exploration project in Africa. Andreas (Andrew) Lianos, CA(SA), ACA, ACMA, Age 53 –Financial Director (Non-Executive) Andrew is a chartered accountant (CA (SA)), certified management accountant (ACMA), certified internal auditor and JSE qualified executive who started his professional career in 1989 with Grant Thornton International. Andrew entered the corporate finance industry in 1994 by joining Deloitte & Touche Corporate Finance. In 1996, he joined Smith Borkum Hare/Merrill Lynch Corporate Finance, and was part of the team that founded Labyrinth Corporate Finance during 1997. He has substantial transaction experience in the resources, food and leisure industries. Andrew has served on the boards of a number of private and public companies. 20 years ago, Andrew co-founded the River Group, Kibo’s JSE Designated and Corporate Advisor and is a director of River Capital Partners Ltd. He is also currently a director of Boudica Trust Co Limited (trading as Boudica Group). Andrew has been involved in a number of successful cross-border restructurings and resource transactions in Canada, the Central African Republic, Sierra Leone, Angola, Zambia, Zimbabwe, Tanzania and South Africa. Review of Business Developments As set out in the Chairman’s Report and review of activities, as well as continuing with its exploration program, the Company continued to decrease its exploration ground holdings in Tanzania during the period, and furthered the development of its feasibility studies towards mining of the identifiable viable resources. Principal Risks and Uncertainties The realisation of exploration and evaluation assets is dependent on the discovery and successful development of economic mineral reserves and is subject to a number of significant potential risks summarised as follows, and described further below: • • • • • • • • • • Financial instrument & Foreign exchange risk ; Strategic risk; Funding risk; Commercial risk; Operational risk; Staffing and Key Personnel Risks; Speculative Nature of Mineral Exploration and Development; Political Stability; and Uninsurable Risks; and Foreign investment risks including increases in taxes, royalties and renegotiation of contracts. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 4 4 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 DIRECTORS’ REPORT KIBO MINING PLC DIRECTORS’ REPORT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Lukas Marthinus Maree, BLC, LLB, Age 54 – (Executive) Financial instrument and foreign exchange risk Lukas Maree is a lawyer by profession. He has served on the boards of a number of public companies including Goldsource Mines Limited, Africo Resources Limited and Diamondworks Limited that have made significant successful investments in exploration projects in Africa and North America, and has more recently served as the CEO of private investment companies Rusaf Gold Limited and Mzuri Capital Group Limited, both of which have successfully developed and sold mineral projects in Russia and Tanzania in the last seven years. He was also a founder principal of River Group, Designated Advisors to the Listing of Kibo on the JSE, and was responsible for its Canadian office until his retirement from the Group in 2013 to pursue personal interests. Wenzel Kerremans, B. Proc, LLB, LLM, Adv. Dip. Age 60 – (Non-Executive) Wenzel Kerremans is a lawyer by profession with over 25 years’ international legal experience in mining, banking, project finance and international tax, advising clients who have invested in exploration and mining projects in Africa. He has also originated and successfully sold Veremo Holdings Limited a billion ton titaneferous magnetite exploration project for the production of iron and titanium slag. Wenzel is also the principal and director of a gold, graphite and coal exploration project in Africa. Andreas (Andrew) Lianos, CA(SA), ACA, ACMA, Age 53 –Financial Director (Non-Executive) Andrew is a chartered accountant (CA (SA)), certified management accountant (ACMA), certified internal auditor and JSE qualified executive who started his professional career in 1989 with Grant Thornton International. Andrew entered the corporate finance industry in 1994 by joining Deloitte & Touche Corporate Finance. In 1996, he joined Smith Borkum Hare/Merrill Lynch Corporate Finance, and was part of the team that founded Labyrinth Corporate Finance during 1997. He has substantial transaction experience in the resources, food and leisure industries. Andrew has served on the boards of a number of private and public companies. 20 years ago, Andrew co-founded the River Group, Kibo’s JSE Designated and Corporate Advisor and is a director of River Capital Partners Ltd. He is also currently a director of Boudica Trust Co Limited (trading as Boudica Group). Andrew has been involved in a number of successful cross-border restructurings and resource transactions in Canada, the Central African Republic, Sierra Leone, Angola, Zambia, Zimbabwe, Tanzania and South Africa. Review of Business Developments As set out in the Chairman’s Report and review of activities, as well as continuing with its exploration program, the Company continued to decrease its exploration ground holdings in Tanzania during the period, and furthered the development of its feasibility studies towards mining of the identifiable viable resources. Principal Risks and Uncertainties The realisation of exploration and evaluation assets is dependent on the discovery and successful development of economic mineral reserves and is subject to a number of significant potential risks summarised as follows, and described further below: Financial instrument & Foreign exchange risk ; • • • • • • • • • • Strategic risk; Funding risk; Commercial risk; Operational risk; Political Stability; and Uninsurable Risks; and Staffing and Key Personnel Risks; Speculative Nature of Mineral Exploration and Development; Foreign investment risks including increases in taxes, royalties and renegotiation of contracts. The Company and Group are exposed to risks arising from financial instruments held and foreign exchange transactions entered into throughout the period. These are discussed in Note 25 to the Annual Financial Statements. Strategic risk Significant and increasing competition exists for mineral acquisition opportunities throughout the world. As a result of this competition, the Company may be unable to acquire rights to exploit additional attractive mining properties on terms it considers acceptable. Accordingly, there can be no assurance that the Company will acquire any interest in additional operations that would yield reserves or result in commercial mining operations. The Company expects to undertake sufficient due diligence where warranted to help ensure opportunities are subjected to proper evaluation. Funding risk In the past the Company has raised funds via equity contributions from new and existing shareholders, thereby ensuring the Company remains a going concern until such time that revenues are earned through the sale or development and mining of a mineral deposit. There can be no assurance that such funds will continue to be available on reasonable terms, or at all in future. The Directors regularly review cash flow requirements to ensure the Company can meet financial obligations as and when they fall due. Commercial risk The mining industry is competitive and there is no assurance that, even if commercial quantities of minerals are discovered, a profitable market will exist for the sale of such minerals. There can be no assurance that the quality of the minerals will be such that the Company properties can be mined at a profit. Factors beyond the control of the Company may affect the marketability of any minerals discovered. Mineral prices are subject to volatile price changes from a variety of factors including international economic and political trends, expectations of inflation, global and regional demand, currency exchange fluctuations, interest rates and global or regional consumption patterns, speculative activities and increased production due to improved mining and production methods. Ultimately, the Company expects that prior to a development decision, a project would be the subject of a feasibility analysis to ensure there exists an appropriate level of confidence in its economic viability. Operational risk Mining operations are subject to hazards normally encountered in exploration, development and production. These include unexpected geological formations, rock falls, flooding, dam wall failure and other incidents or conditions which could result in damage to plant or equipment or the environment and which could impact any future production throughout. Although it is intended to take adequate precautions to minimise risk, there is a possibility of a material adverse impact on the Company’s operations and its financial results. The Company will develop and maintain policies appropriate to the stage of development of its various projects. Staffing and Key Personnel Risks Recruiting and retaining qualified personnel is critical to the Company’s success. The number of persons skilled in the acquisition, exploration and development of mining properties is limited and competition for such persons is intense. While the Company has good relations with its employees, these relations may be impacted by changes in the scheme of labour relations which may be introduced by the relevant governmental authorities. Adverse changes in such legislation may have a material adverse effect on the Company’s business, results of operations and financial condition. Staff are encouraged to discuss with management matters of interest to the employees and subjects affecting day-to-day operations of the Company. Speculative Nature of Mineral Exploration and Development In addition to the above there can be no assurance that the current exploration programs will result in profitable mining operations. The recoverability of the carrying value of exploration and evaluation assets is dependent on the successful discovery of economically recoverable reserves, the achievement of profitable operations, and the ability of the Company to raise additional financing, if necessary, or alternatively upon the Company’s ability to dispose of its interests on an advantageous basis. Changes in market conditions could require material write downs of the carrying value of the Company’s assets. 4 5 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 5 KIBO MINING PLC DIRECTORS’ REPORT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Development of the Company’s mineral exploration properties is, amongst others, contingent upon obtaining satisfactory exploration results and securing additional adequate funding. Mineral exploration and development involves substantial expenses and a high degree of risk, which even a combination of experience, knowledge and careful evaluation may not be able to adequately mitigate. The degree of risk reduces substantially when a Company’s properties move from the exploration phase to the development phase. Management continuously assesses funding requirements against project viability and prioritise key projects over the short to medium term. As the key projects such as MCPP is moving closer to development phase the risk is further reduced. The discovery of mineral deposits is dependent upon a number of factors including the technical skill of the exploration personnel involved. The commercial viability of a mineral deposit, once discovered, is also dependent upon a number of factors, including the size, grade and proximity to infrastructure, metal prices and government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection. In addition, several years can elapse from the initial phase of drilling until commercial operations are commenced. Political Stability The Company is conducting its activities in Tanzania. The Directors believe that the Government of Tanzania supports the development of natural resources by foreign investors and actively monitor the situation. However, there is no assurance that future political and economic conditions in Tanzania will not result in the Government of Tanzania adopting different policies regarding foreign development and ownership of mineral resources. Any changes in policy affecting ownership of assets, taxation, rates of exchange, environmental protection, labour relations, repatriation of income and return of capital, may affect the Company’s ability to develop the projects. Uninsurable Risks The Company may become subject to liability for accidents, pollution and other hazards against which it cannot insure or against which it may elect not to insure because of prohibitive premium costs or for other reasons, such as amounts which exceed policy limits. The company chooses to manage these risks, as best possible, through cautious business practice, on a continuous business. Foreign investment risks including increases in taxes, royalties and renegotiation of contracts The Group is subject to risk arising from the ever-changing economic environment in which its subsidiaries operate, mainly driven by the changing regulatory environment governing corporate taxation, transfer pricing and other investment related operational activities. The Group continues to re-assess its investment decisions in order to limit exposure to the ever-changing regulatory environment in which it operates. Results The result for the year after providing for depreciation and taxation amounted to a loss of £4,519,813 for the year ended 31 December 2017 (31 December 2016: 3,585,416). Post Statement of Financial Position events There have been no material post reporting date events other than those stated in Note 26 to these consolidated annual financial statements. Directors Interests The interests of the Directors and Company Secretary (held directly and indirectly), who held office at the date of approval of the financial statements, in the share capital of the Company are as follows: Ordinary Shares (held directly and indirectly) 12/06/18 31/12/17 31/12/16 Directors & Secretary Christian Schaffalitzky Noel O’Keeffe Louis Coetzee Lukas Maree Wenzel Kerremans Andreas Lianos 2,119,842 3,591,447 8,065,996 2,934,200 376,241 7,588,633 2,119,842 3,591,447 8,065,996 2,934,200 376,241 7,588,633 2,119,842 2,291,447 6,765,996 2,934,200 376,241 6,288,633 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 6 6 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 DIRECTORS’ REPORT KIBO MINING PLC DIRECTORS’ REPORT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Development of the Company’s mineral exploration properties is, amongst others, contingent upon obtaining satisfactory exploration results and securing additional adequate funding. Mineral exploration and development involves substantial expenses and a high degree of risk, which even a combination of experience, knowledge and careful evaluation may not be able to adequately mitigate. The degree of risk reduces substantially when a Company’s properties move from the exploration phase to the development phase. Management continuously assesses funding requirements against project viability and prioritise key projects over the short to medium term. As the key projects such as MCPP is moving closer to development phase the risk is further reduced. The discovery of mineral deposits is dependent upon a number of factors including the technical skill of the exploration personnel involved. The commercial viability of a mineral deposit, once discovered, is also dependent upon a number of factors, including the size, grade and proximity to infrastructure, metal prices and government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection. In addition, several years can elapse from the initial phase of drilling until commercial operations are commenced. Political Stability The Company is conducting its activities in Tanzania. The Directors believe that the Government of Tanzania supports the development of natural resources by foreign investors and actively monitor the situation. However, there is no assurance that future political and economic conditions in Tanzania will not result in the Government of Tanzania adopting different policies regarding foreign development and ownership of mineral resources. Any changes in policy affecting ownership of assets, taxation, rates of exchange, environmental protection, labour relations, repatriation of income and return of capital, may affect the Company’s ability to develop the projects. Uninsurable Risks Share Options (held directly and indirectly) 12/06/18 31/12/17 31/12/16 Directors & Secretary Christian Schaffalitzky Louis Coetzee Noel O’Keeffe Lukas Maree Wenzel Kerremans Andreas Lianos - - - - - - 700,000 2,200,000 2,000,000 700,000 700 000 2,000,000 700,000 2,200,000 2,000,000 700,000 700,000 2,000,000 The above share options in issue were exercisable at a price of £0.050 at any time up to 1 June 2018. For further detail surrounding the ordinary shares and share options in issue, refer to Notes 15 and 17 of the annual financial statements. Transactions Involving Directors There have been no contracts or arrangements of significance during the period in which Directors of the Company, or their related parties, were interested other than as disclosed in Note 24 to the annual financial statements. Directors meetings The Company may become subject to liability for accidents, pollution and other hazards against which it cannot insure or against which it may elect not to insure because of prohibitive premium costs or for other reasons, such as amounts which exceed policy limits. The company chooses to manage these risks, as best possible, through cautious business practice, on a continuous business. Foreign investment risks including increases in taxes, royalties and renegotiation of contracts Director Name Position The Company held 14 (fourteen) Board meetings during the reporting period and the number of meetings attended by each of the Directors of the Company during the year to 31 December 2017 were: Number of Meetings Attended Number of Meetings Eligible to Attend The Group is subject to risk arising from the ever-changing economic environment in which its subsidiaries operate, mainly driven by the changing regulatory environment governing corporate taxation, transfer pricing and other investment related operational activities. The Group continues to re-assess its investment decisions in order to limit exposure to the ever-changing regulatory environment in which it operates. Results Christian Schaffalitzky Louis Coetzee Andreas Lianos Noel O’Keeffe Lukas Maree Wenzel Kerremans Chairman Chief Executive Officer Non-Executive Financial Director Non-Executive Technical Director Executive Director Non-Executive Director 13 14 14 14 13 14 14 14 14 14 14 14 The result for the year after providing for depreciation and taxation amounted to a loss of £4,519,813 for the year ended 31 December 2017 (31 December 2016: 3,585,416). Post Statement of Financial Position events In terms of the Company’s Memorandum & Articles of Association, one third of Directors are required to retire by rotation from the Board on an annual basis, through resignation at the Annual General Meeting. Committee meetings The Company held 2 (two) Audit Committee meetings during the reporting period and the number of meetings attended by each of the members during the year to 31 December 2017 were: Number of Meetings Attended Number of Meetings Eligible to Attend Director Name Position Christian Schaffalitzky Wenzel Kerremans Lukas Maree Chairman (Non-Executive) Non-Executive Director Executive Director 2 2 2 2 2 2 The Company held 1 (one) Remuneration Committee meeting during the reporting period and the number of meetings attended by each of the members during the year to 31 December 2017 were: Number of Meetings Attended Number of Meetings Eligible to Attend Director Name Position Christian Schaffalitzky Wenzel Kerremans Lukas Maree Chairman (Non-Executive) Non-Executive Director Executive Director 7 1 1 1 1 1 1 7 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 There have been no material post reporting date events other than those stated in Note 26 to these consolidated annual financial statements. Directors Interests The interests of the Directors and Company Secretary (held directly and indirectly), who held office at the date of approval of the financial statements, in the share capital of the Company are as follows: Ordinary Shares (held directly and indirectly) 12/06/18 31/12/17 31/12/16 Directors & Secretary Christian Schaffalitzky Noel O’Keeffe Louis Coetzee Lukas Maree Wenzel Kerremans Andreas Lianos 2,119,842 3,591,447 8,065,996 2,934,200 376,241 7,588,633 2,119,842 2,291,447 6,765,996 2,934,200 376,241 6,288,633 2,119,842 3,591,447 8,065,996 2,934,200 376,241 7,588,633 6 KIBO MINING PLC DIRECTORS’ REPORT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 The Company held 1 (one) Governance Committee meeting during the reporting period and the number of meetings attended by each of the members during the year to 31 December 2017 were: Number of Meetings Attended Number of Meetings Eligible to Attend Director Name Position Christian Schaffalitzky Wenzel Kerremans Lukas Maree Significant Shareholdings Chairman (Non-Executive) Non-Executive Director Executive Director 1 1 1 1 1 1 The Company has been informed that, in addition to the interests of the Directors, at 31 December 2017 and at the date of this report, the following shareholders own 3% or more beneficial interest, either direct or indirect, of the issued share capital of the Company, which is considered significant for disclosure purposes in the annual financial statements: Percentage of issued share capital 12/06/18 31/12/2017 31/12/16 Sanderson Capital Partners Ltd Sechaba Natural Resources Limited * Beneficial interest was below 3%, and thus considered not to be a significant shareholder under the AIM Rules for companies. 5.28% 25.47% 4.15% - * - Subsidiary Undertakings Details of the Company’s subsidiary undertakings are set out in Note 23 to the annual financial statements. Political Donations During the period, the Group made no charitable or political contributions (2016: £ nil). Going Concern The Company and Group’s ability to continue as a going concern is dependent on the sourcing of additional funding by the Directors for the foreseeable future. The future of the Company and the Group is dependent on the successful future outcome of its short and medium term ability to raise new equity funding and the successful development of its exploration interests and of the availability of further funding to bring these interests to production. The Directors consider that in preparing the financial statements they have taken into account all information that could reasonably be expected to be available. Consequently, they consider that it is appropriate to prepare the financial statements on the going concern basis. The capital-raising subsequent to appointing the new Joint Brokers during March and April 2018 has provided further cash resources in order to ensure prospecting activities are continued as planned without interruption. The prospective conclusion of the Power Purchase Agreement with the Tanzania Electric Supply Company will provide the Group with access to a currently under-served market. This project is considered our flag-ship project and will place the Group in a favourable position to request additional funding from financers whom have supported the Group historically due to the potential for return on their investments. The directors are also following an active approach to continuously reduce administrative costs in order to alleviate the pressure on cash flow. Furthermore, while the conclusion of the Power Purchase Agreement with the Tanzania Electric Supply Company is being finalised, the Group continues to minimize exploration activities in order to prioritise the MCPP. The Directors have reviewed budgets, projected cash flows and other relevant information, and on the basis of this review, are confident that the Company and the Group will have adequate financial resources to continue in operational existence for the foreseeable future. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 8 8 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 DIRECTORS’ REPORT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 KIBO MINING PLC DIRECTORS’ REPORT Environmental responsibility The Company held 1 (one) Governance Committee meeting during the reporting period and the number of meetings attended by each of the members during the year to 31 December 2017 were: Director Name Position Number of Meetings Attended Number of Meetings Eligible to Attend The Company recognises that its activities require it to have regard to the potential impact that it, its subsidiaries and partners may have on the environment. Where exploration and development works are carried out, care is taken to limit the amount of disturbance and where any remediation works are required they are carried out as and when required. Dividends Christian Schaffalitzky Wenzel Kerremans Lukas Maree Significant Shareholdings Chairman (Non-Executive) Non-Executive Director Executive Director 1 1 1 1 1 1 The Company has been informed that, in addition to the interests of the Directors, at 31 December 2017 and at the date of this report, the following shareholders own 3% or more beneficial interest, either direct or indirect, of the issued share capital of the Company, which is considered significant for disclosure purposes in the annual financial statements: Percentage of issued share capital 12/06/18 31/12/2017 31/12/16 Sanderson Capital Partners Ltd 5.28% 4.15% * Sechaba Natural Resources Limited * Beneficial interest was below 3%, and thus considered not to be a significant shareholder under the AIM Rules for companies. 25.47% - - Subsidiary Undertakings Details of the Company’s subsidiary undertakings are set out in Note 23 to the annual financial statements. Political Donations During the period, the Group made no charitable or political contributions (2016: £ nil). Going Concern The Company and Group’s ability to continue as a going concern is dependent on the sourcing of additional funding by the Directors for the foreseeable future. The future of the Company and the Group is dependent on the successful future outcome of its short and medium term ability to raise new equity funding and the successful development of its exploration interests and of the availability of further funding to bring these interests to production. The Directors consider that in preparing the financial statements they have taken into account all information that could reasonably be expected to be available. Consequently, they consider that it is appropriate to prepare the financial statements on the going concern basis. The capital-raising subsequent to appointing the new Joint Brokers during March and April 2018 has provided further cash resources in order to ensure prospecting activities are continued as planned without interruption. The prospective conclusion of the Power Purchase Agreement with the Tanzania Electric Supply Company will provide the Group with access to a currently under-served market. This project is considered our flag-ship project and will place the Group in a favourable position to request additional funding from financers whom have supported the Group historically due to the potential for return on their investments. The directors are also following an active approach to continuously reduce administrative costs in order to alleviate the pressure on cash flow. Furthermore, while the conclusion of the Power Purchase Agreement with the Tanzania Electric Supply Company is being finalised, the Group continues to minimize exploration activities in order to prioritise the MCPP. The Directors have reviewed budgets, projected cash flows and other relevant information, and on the basis of this review, are confident that the Company and the Group will have adequate financial resources to continue in operational existence for the foreseeable future. 8 There have been no dividends declared or paid during the current financial period (2016: £ nil). Corporate Governance Policy The Board is aware of the importance to conform to its statutory responsibilities and industry good practice in relation to corporate governance of the Group. The Board is accountable to the shareholders for delivery of sustained value growth. In order to support its duties and responsibilities the Board implements control procedures that assess and manage risk and ensure robust financial and operational management within the Company. The principal risks that the Company is exposed to can be classified under the general headings of exploration risk, commodity risk, price risk, currency risk and political risk. The Board also sets the Company’s core values and ethical standards of business conduct ensuring these are effectively communicated to all staff and are monitored continuously by the Board. The Board sets the Company’s strategy and monitors its implementation through management and financial performance reviews. It also works to ensure that adequate resources are available to implement strategy in a timely manner. The Company subscribes to the values of good corporate governance at all levels and is committed to conduct business with discipline, integrity and social responsibility. The Board of Directors is firmly committed to promoting Kibo Mining Plc’s adherence to the principles contained in the King Code on Corporate Governance (the Code). The Code is constantly being reviewed and the Directors are implementing the Code in a phased manner. The Directors are committed to the implementation of the principles and non-compliance is limited to the matter listed in this report. Role of Directors All Board members ensure that appropriate governance procedures are adhered to and there is a clear division of responsibilities at Board level to ensure a balance of power and authority so that no one individual has unfettered powers of decision making. The role of Chairman and Chief Executive Officer are not held by the same Director. The Chairman is a non-executive Director. Board and Audit Committee meetings have been taking place periodically and the executive Directors manage the daily Company operations with the Board meetings taking place on a regular basis throughout the financial period. During the current reporting period the Board met 14 (fourteen) times and provided pertinent information to the Executive Committee of the Company. The Board is responsible for effective control over the affairs of the Company, including: strategic and policy decision- making financial control, risk management, communication with stakeholders, internal controls and the asset management process. Although there was no specific committee tasked with identifying, analysing and reporting on risk during the financial period, this was nevertheless part of the everyday function of the Directors and was managed at Board level. Directors are entitled, in consultation with the Chairman, to seek independent professional advice about the affairs of the Company, at the Company’s expense. Audit Committee The members of the audit committee are Christian Schaffalitzky, Lukas Maree and Wenzel Kerremans. The audit committee has set out its roles and responsibilities within its charter and ensured that it is aligned to good financial governance principles. 9 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 9 ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 KIBO MINING PLC DIRECTORS’ REPORT These include: • • • • • • • • the establishment of an Audit Committee to guide the audit approach, as well as its modus operandi and the rules that govern the audit relationship; assess the processes relating to and the results emanating from the Group’s risk and control environment; monitoring the integrity of the group’s integrated reporting and all factors and risks that may impact on reporting; annually reviewing the expertise, appropriateness and experience of the finance function; annually nominating the external auditors for appointment by the shareholders; reviewing developments in governance and best practice; foster and improve open communication and contact with relevant stakeholders of the Group; and assessing the external auditor’s independence and determining their remuneration. The audit committee further sets the principles for recommending the external auditors for non-audit services use. The audit committee has satisfied itself of the suitability of the chief financial officer, and that the chief financial officer holds the necessary expertise and has the relevant experience. The committee met twice during the current year. Remuneration Committee The members of the remuneration committee are Christian Schaffalitzky, Wenzel Kerremans and Lukas Maree. The purpose of the remuneration committee is to discharge the responsibilities of the board relating to all compensation, including equity compensation of the Company’s executives. The remuneration committee establishes and administers the Company’s executive remuneration with the broad objective of aligning executive remuneration with Company performance and shareholder interests, setting remuneration standards aimed at attracting, retaining and motivating the executive team, linking individual pay with operational and Company performance in relation to strategic objectives; and evaluating compensation of executives including approval of salary, equity and incentive- based awards. The committee is empowered by the Board to set short, medium and long-term remuneration for the executive Directors. More generally, the committee is responsible for the assessment and approval of a Board remuneration strategy for the Group. The committee met once during the current year. Governance Committee The members of the governance committee are Christian Schaffalitzky, Lukas Maree and Wenzel Kerremans. The Governance Committee has set out its roles and responsibilities within its charter and ensured that it is aligned to good financial governance principles. • • These include: monitoring the compliance of the Group with legal requirements and the Group’s Code of Ethics; and monitoring the integrity of the group’s integrated reporting and all factors and risks that may impact on reporting. The committee met once during the current year. Internal Audit The Company does not have an internal audit function. Currently the operations of the Group do not warrant an internal audit function, however the Board is assessing the need to establish an internal audit department considering future prospects as the Group’s operations increase. During the period the Board has taken responsibility to ensure effective governance, risk management and that the internal control environment is maintained. Health, Safety and Environmental Policy The Group is committed to high standards of Health, Safety and Environmental performance across our business. Our goal is to protect people, minimize harm to the environment, integrate biodiversity considerations and reduce disruption to our neighbouring communities. We seek to achieve continuous improvement in our Health, Safety and KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2016 10 Environmental performance. 10 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 KIBO MINING PLC DIRECTORS’ REPORT ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Corporate Social Responsibility Policy (CSR) The Group’s policy is to conduct all our business operations to best industry standards and to behave in a socially responsible manner. Our goal is to behave ethically and with integrity and to respect cultural, national and religious diversity. Governance of IT The Board is responsible for IT governance as an integral part of the Group’s governance as a whole. The IT function is not expected to significantly change in the foreseeable future. The Board has the required policies and procedures in place to ensure governance of IT is adhered to. Integrated and Sustainability Reporting Integrated Reporting is defined as a “holistic and integrated representation of the Group’s performance in terms of both its finances and its sustainability”. The Group currently does not have a separate integrated report. The Board and its sub-committees are in the process of assessing the principles and practices of integrated reporting and sustainability reporting to ensure that adequate information about the operations of the Group, the sustainability issues pertinent to its business, the financial results and the results of its operations and cash flows are disclosed in a single report. Statement of Directors Responsibility The Directors are responsible for preparing the Group and Company financial statements in accordance with applicable Laws and Regulations. Irish Company law requires the Directors to prepare Group and parent Company financial statements for each financial period. As permitted by Company law, the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU IFRS) and have elected to prepare the Company financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU IFRS), as applied in accordance with the provisions of the Companies Act 2014. • • • • The Group and Company financial statements are required by law and EU IFRS to present fairly the financial position and performance of the Group. The Companies Act 2014 provide in relation to such financial statements that reference in the relevant parts of the Acts to financial statements giving a true and fair view are references to their achieving a fair presentation. In preparing each of the Group and Company financial statements, the Directors are required to: select suitable accounting policies and apply them consistently; make judgements and estimates that are reasonable and prudent; state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business. The Directors confirm they have complied with the above requirements in preparing these accounts. Under applicable law the Directors are also responsible for preparing a Directors’ Report and reports relating to Directors’ remuneration and corporate governance that comply with that law and those rules. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and which enable them to ensure that its financial statements are prepared in accordance with International Financial Reporting Standards, and comply with the Companies Act 2014, and European Communities (Companies: Group Accounts) Regulations 1992 and all regulations to be construed as one with those acts. They are also responsible for taking such steps as are reasonably open to them to safeguard the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Corporate Governance The Directors are committed to maintaining the highest standards of corporate governance commensurate with the 11 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2016 size, stage of development and financial status of the Group. 11 DIRECTORS’ REPORT These include: • • • • • • • • the establishment of an Audit Committee to guide the audit approach, as well as its modus operandi and the rules that govern the audit relationship; assess the processes relating to and the results emanating from the Group’s risk and control environment; monitoring the integrity of the group’s integrated reporting and all factors and risks that may impact on reporting; annually reviewing the expertise, appropriateness and experience of the finance function; annually nominating the external auditors for appointment by the shareholders; reviewing developments in governance and best practice; foster and improve open communication and contact with relevant stakeholders of the Group; and assessing the external auditor’s independence and determining their remuneration. The audit committee further sets the principles for recommending the external auditors for non-audit services use. The audit committee has satisfied itself of the suitability of the chief financial officer, and that the chief financial officer holds the necessary expertise and has the relevant experience. The committee met twice during the current year. Remuneration Committee The members of the remuneration committee are Christian Schaffalitzky, Wenzel Kerremans and Lukas Maree. The purpose of the remuneration committee is to discharge the responsibilities of the board relating to all compensation, including equity compensation of the Company’s executives. The remuneration committee establishes and administers the Company’s executive remuneration with the broad objective of aligning executive remuneration with Company performance and shareholder interests, setting remuneration standards aimed at attracting, retaining and motivating the executive team, linking individual pay with operational and Company performance in relation to strategic objectives; and evaluating compensation of executives including approval of salary, equity and incentive- based awards. The committee is empowered by the Board to set short, medium and long-term remuneration for the executive Directors. More generally, the committee is responsible for the assessment and approval of a Board remuneration strategy for the Group. The committee met once during the current year. Governance Committee The members of the governance committee are Christian Schaffalitzky, Lukas Maree and Wenzel Kerremans. The Governance Committee has set out its roles and responsibilities within its charter and ensured that it is aligned to good financial governance principles. monitoring the compliance of the Group with legal requirements and the Group’s Code of Ethics; and monitoring the integrity of the group’s integrated reporting and all factors and risks that may impact on • • These include: reporting. The committee met once during the current year. Internal Audit The Company does not have an internal audit function. Currently the operations of the Group do not warrant an internal audit function, however the Board is assessing the need to establish an internal audit department considering future prospects as the Group’s operations increase. During the period the Board has taken responsibility to ensure effective governance, risk management and that the internal control environment is maintained. Health, Safety and Environmental Policy The Group is committed to high standards of Health, Safety and Environmental performance across our business. Our goal is to protect people, minimize harm to the environment, integrate biodiversity considerations and reduce disruption to our neighbouring communities. We seek to achieve continuous improvement in our Health, Safety and Environmental performance. 10 KIBO MINING PLC DIRECTORS’ REPORT The Board ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 The Board is responsible for the supervision and control of the Company and is accountable to the shareholders. The Board has reserved decision-making on a variety of matters, including determining strategy for the Group, reviewing and monitoring executive management performance and monitoring risks and controls. The Board has 6 (six) Directors, comprising 2 (two) executive Directors and 4 (four) non-executive Directors. The Board met formally on 14 (fourteen) occasions during the year ended 31 December 2017. An agenda and supporting documentation was circulated in advance of each meeting. All the Directors bring independent judgement to bear on issues affecting the Group and all have full and timely access to information necessary to enable them to discharge their duties. The Directors have a wide and varying array of experiences in the industry. Accounting records The measures taken by the Directors to ensure compliance with the requirements in Sections 281 to 285 of the Companies Act 2014, regarding proper books of account, are the implementation of necessary policies and procedures for recording transactions, the employment of competent accounting personnel with appropriate expertise and the provision of adequate resources to the financial function. The books of account of the Company are maintained at Kolonakiou, 37, Linopetra, P.C. 4103, Limmasol, Cyprus. Compliance statement The Directors acknowledge that they are responsible for securing the Company's compliance with the Company's ''relevant obligations'' within the meaning of section 225 of the Companies Act 2014 (described below as the ''Relevant Obligations''). The Directors confirm that they have: • • drawn up a compliance policy statement setting out the Company's policies (that are, in the opinion of the directors, appropriate to the Company) in respect of the Company's compliance with its Relevant Obligations; put in place appropriate arrangements or structures that, in the opinion of the Directors, provide a reasonable assurance of compliance in all material respects with the Company's Relevant Obligations; and during the financial year to which this report relates, conducted a review of the arrangements of structures that the directors have put in place to ensure material compliance with the Company's Relevant Obligations. • On behalf of the Board Christian Schaffalitzky ________________________ Date: 12 June 2018 Noel O’Keeffe ________________________ Date: 12 June 2018 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 12 12 DIRECTORS’ REPORT The Board The Board is responsible for the supervision and control of the Company and is accountable to the shareholders. The Board has reserved decision-making on a variety of matters, including determining strategy for the Group, reviewing and monitoring executive management performance and monitoring risks and controls. The Board has 6 (six) Directors, comprising 2 (two) executive Directors and 4 (four) non-executive Directors. The Board met formally on 14 (fourteen) occasions during the year ended 31 December 2017. An agenda and supporting documentation was circulated in advance of each meeting. All the Directors bring independent judgement to bear on issues affecting the Group and all have full and timely access to information necessary to enable them to discharge their duties. The Directors have a wide and varying array of experiences in the industry. Accounting records The measures taken by the Directors to ensure compliance with the requirements in Sections 281 to 285 of the Companies Act 2014, regarding proper books of account, are the implementation of necessary policies and procedures for recording transactions, the employment of competent accounting personnel with appropriate expertise and the provision of adequate resources to the financial function. The books of account of the Company are maintained at Kolonakiou, 37, Linopetra, P.C. 4103, Limmasol, Cyprus. Compliance statement The Directors acknowledge that they are responsible for securing the Company's compliance with the Company's ''relevant obligations'' within the meaning of section 225 of the Companies Act 2014 (described below as the ''Relevant Obligations''). The Directors confirm that they have: • • • drawn up a compliance policy statement setting out the Company's policies (that are, in the opinion of the directors, appropriate to the Company) in respect of the Company's compliance with its Relevant Obligations; put in place appropriate arrangements or structures that, in the opinion of the Directors, provide a reasonable assurance of compliance in all material respects with the Company's Relevant Obligations; and during the financial year to which this report relates, conducted a review of the arrangements of structures that On behalf of the Board the directors have put in place to ensure material compliance with the Company's Relevant Obligations. Christian Schaffalitzky ________________________ Date: 12 June 2018 Noel O’Keeffe ________________________ Date: 12 June 2018 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 KIBO MINING PLC INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Opinion We have audited the financial statements of Kibo Mining Plc for the year ended 31 December 2017 on pages 17 to 55 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Changes in Equity, the Consolidated and Company Statements of Cash Flows, and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. • In our opinion, the financial statements: • • give a true and fair view of the state of affairs of the Group and of the parent Company as at 31 December 2017 and their losses for the period then ended; have been properly prepared in accordance with IFRSs as adopted by the European Union; and have been prepared in accordance with the requirements of the Irish Companies Act 2014. This report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an Auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Emphasis of Matter In forming our opinion on the financial statements, which is not modified, we considered the adequacy of disclosures made in Notes 11, 13 and 23 to the financial statements concerning the valuation of intangible assets, and investments in Group undertakings. The realisation of intangible assets of £17,596,105 (2016: £17,596,105), amounts due from Group undertakings of £24,402,788 (2016: £26,998,867) and investments in Group undertakings of £3,468,224 (2016: £1,700,000) included in the Company Statement of Financial Position are dependent on the economic exploitation of gold and coal reserves including the ability of the Group to raise sufficient finance to develop these projects. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Ireland, including the FRC’s Ethical Standard as applied to SME listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern We have nothing to report in respect of the following matters in relation to which the ISAs (Ireland) require us to report to you where: • • the Directors’ use of the going concern basis of accounting in the preparation of the financial not appropriate; or statements is the Directors have not disclosed in the financial statements any identified material uncertainties that may going concern basis of accounting cast significant doubt about the Company’s ability to continue to adopt the financial statements are authorised for issue. for a period of at least twelve months from the date when the 12 13 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 13 KIBO MINING PLC INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. How our audit addressed the key audit matter Key audit matter Katoro transaction involved During the year, the Group disposed of certain in the Lake Victoria gold subsidiaries exploration project. The acquirer was Opera Investments Plc. The consideration for the purchase was new shares in Opera Investments Plc, which resulted in Kibo Mining Plc holding 57.1% of the post- transaction share capital of Opera Investments PLC. Opera Investments Plc subsequently changed its name to Katoro Gold Plc and remains listed on AIM. financial statements and Due to the complexity of the transaction, its effect on the consolidated the significant judgements involved in these calculations, the Katoro ensuring transaction in the consolidated financial statements is a key audit matter. Carrying value of intangible assets treatment of the correct Our audit procedures included the following: - Reviewing documentation to confirm the terms of the transaction are in line with those disclosed; - Considering the treatment and disclosure of the transaction in line with IFRS 3 and other applicable IFRS; - Reviewing the consolidation workings and performing recalculations where appropriate. Based on our procedures, we noted no material exceptions and considered management’s treatment of the Katoro transaction to be appropriate. The carrying value of intangible assets included in the Group’s balance sheet at 31 December 2017 was stated at £17.6m, relating to the Mbeya project. - Assessing the methodology used by the Directors to calculate recoverable amounts and evaluated if it complies with the requirements of IAS 36; Our audit procedures included the following: The Directors assess at each reporting period end whether there is any indication that an asset may be impaired and intangible assets with an indefinite life must be tested for impairment on an annual basis. The determination of recoverable amount, being the higher of value-in-use and fair value less costs to dispose, requires judgement on the part of management in both identifying and then valuing the relevant cash generating units (‘CGUs’), especially for projects where the there is an uncertain timeframe. Any impairment in these CGUs could lead to subsequent impairments in the parent company investments in subsidiaries or these intercompany subsidiaries. loans to Due to the significance of the intangible assets to the consolidated financial statements, the significant judgements involved in these calculations and the potential impact to parent company investments and intercompany loans, the carrying value of intangible assets is a key audit matter. - Assessing the viability of the Mbeya development asset by analysing future projected cash flows used in the value in use calculations for the CGU to determine whether the assumptions used in projecting the cash flows are reasonable and supportable given the current macroeconomic climate; - Performing sensitivity analysis on key assumptions and testing the mathematical accuracy of models; - Comparing foreign exchange rates used in management’s calculations against third party sources; - Understanding the commercial prospects of the assets, and where possible comparison of assumptions with external data sources; - Reviewing correspondence and other sources for evidence of impairment; - Reviewing the recoverability of intercompany KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 14 loans within the parent company and indicators of impairment in investments in subsidiaries; and 14 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS KIBO MINING PLC INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Our application of materiality - Assessing the appropriateness and completeness of the related disclosures in Note 11, intangible assets, of the group financial statements. Based on our procedures, we noted no material exceptions and considered management’s key assumptions to be within reasonable ranges. We apply the concept of materiality in planning and performing our audit, in evaluating the effect of any identified misstatements and in forming our opinion. Our overall objective as auditor is to obtain reasonable assurance that the financial statements as a whole are free from material misstatement, whether due to fraud or error. We consider a misstatement to be material where it could be reasonably expected to influence the economic decisions of the users of the financial statements. We have determined materiality of £100,000 (2016: £50,000) in both the Group and Company financial statements. This is based on 2% of gross assets. An overview of the scope of our audit Based on our procedures, we noted no material exceptions and considered management’s treatment of the Katoro transaction to be appropriate. We tailored the scope of our audit to ensure that we obtained sufficient evidence to support our opinion on the financial statements as a whole, taking into account the structure of the Group and the Company, the accounting processes and controls and the industry in which the Group operates. As Group auditors we carried out the audit of the Company financial statements and, in accordance with ISA (Ireland) 600, obtained sufficient evidence regarding the audit of nine subsidiaries undertaken by component auditors in Tanzania, Cyprus and the United Kingdom. These nine subsidiaries were deemed to be significant to the Group financial statements either due to their size or their risk characteristics. The Group audit team directed and reviewed the work of the component auditors in Tanzania, Cyprus and the United Kingdom, which involved issuing detailed instructions, holding regular discussions with component audit teams and performing detailed file reviews. Audit work in significant components was performed at materiality levels of £35,000, lower than Group materiality. As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the Directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud. Other information The Directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our Auditors’ report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard. 15 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 15 Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How our audit addressed the key audit matter Katoro transaction Our audit procedures included the following: During the year, the Group disposed of certain - Reviewing documentation to confirm the terms subsidiaries involved in the Lake Victoria gold of the transaction are in line with those exploration project. The acquirer was Opera disclosed; Investments Plc. The consideration for the purchase was new shares in Opera Investments Plc, which - Considering the treatment and disclosure of the resulted in Kibo Mining Plc holding 57.1% of the post- transaction in line with IFRS 3 and other transaction share capital of Opera Investments applicable IFRS; PLC. Opera Investments Plc subsequently changed its name to Katoro Gold Plc and remains listed on AIM. - Reviewing the consolidation workings and performing recalculations where appropriate. Due to the complexity of the transaction, its effect on the consolidated financial statements and the significant judgements involved in these calculations, ensuring the correct treatment of the Katoro transaction in the consolidated financial statements is a key audit matter. Carrying value of intangible assets The carrying value of intangible assets included in the - Assessing the methodology used by the Directors Group’s balance sheet at 31 December 2017 was stated to calculate recoverable amounts and evaluated at £17.6m, relating to the Mbeya project. if it complies with the requirements of IAS 36; Our audit procedures included the following: The Directors assess at each reporting period end whether there is any indication that an asset may be impaired and intangible assets with an indefinite life must be tested for impairment on an annual basis. The determination of recoverable amount, being the higher of value-in-use and fair value less costs to dispose, requires judgement on the part of management in both identifying and then valuing the relevant cash generating units (‘CGUs’), especially for projects where the there is an uncertain timeframe. - Assessing the viability of the Mbeya development asset by analysing future projected cash flows used in the value in use calculations for the CGU to determine whether the assumptions used in projecting the cash flows are reasonable and supportable given the current macroeconomic climate; - Performing sensitivity analysis on key assumptions and testing the mathematical accuracy of models; Any impairment in these CGUs could lead to subsequent impairments in the parent company investments in subsidiaries or intercompany loans to these - Comparing foreign exchange rates used in management’s calculations against third party sources; subsidiaries. Due to the significance of the intangible assets to the consolidated financial statements, the significant judgements involved in these calculations and the potential impact to parent company investments and intercompany loans, the carrying value of intangible assets is a key audit matter. - Understanding the commercial prospects of the assets, and where possible comparison of assumptions with external data sources; - Reviewing correspondence and other sources for evidence of impairment; - Reviewing the recoverability of intercompany loans within the parent company and indicators of impairment in investments in subsidiaries; 14 and KIBO MINING PLC INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS Opinions on other matters prescribed by the Companies Act 2014 ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 In our opinion, based on the work undertaken in the course of the audit: • • the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and Matters on which we are required to report by exception the Directors’ Report has been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors’ Report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2014 requires us to report to you if, in our opinion: • • • • adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or the financial statements are not in agreement with the accounting records and returns; or certain disclosures of Directors’ remuneration specified by law are not made; or Responsibilities of Directors we have not received all the information and explanations we require for our audit. As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Richard Collis (Senior Statutory Auditor) for and on behalf of Saffery Champness LLP Chartered Accountants Statutory Auditors 71 Queen Victoria Street London EC4V 4BE 12 June 2018 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 16 16 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS Opinions on other matters prescribed by the Companies Act 2014 KIBO MINING PLC CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 GROUP In our opinion, based on the work undertaken in the course of the audit: All figures are stated in Sterling 31 December 2017 Note Audited £ Continuing operations Revenue Administrative expenses Listing and Capital raising fees Exploration expenditure Operating loss Loss on ordinary activities before tax Investment and other income for the period Loss Taxation Other comprehensive gain: Items that may be classified subsequently to profit or loss: Exchange differences on translation of foreign operations Other Comprehensive gain for the period net of tax Adjustment arising from change in non-controlling interest Total comprehensive loss for the period Loss for the period Attributable to the owners of the parent Attributable to the non-controlling interest Total comprehensive loss for the period Attributable to the owners of the parent Attributable to the non-controlling interest Loss Per Share Basic loss per share Diluted loss per share 2 17 3 4 7 9 9 31 December 2016 Audited £ 18,039 (1,653,152) (1,648,004) (1,716,967) - (1,871,697) (908,543) (1,741,018) (4,521,258) 1,445 (4,519,813) (5,000,084) 1,414,668 (3,585,416) (4,519,813) - - (3,585,416) 16,985 - 16,985 99,128 1,527,515 1,626,643 (4,502,828) (1,958,773) (4,519,813) (3,712,707) (807,106) (3,585,416) (3,611,496) 26,080 (4,502,828) (3,689,196) (813,632) (1,986,288) (1,984,853) 26,080 (0.010) (0.010) (0.010) (0.010) All activities derive from continuing operations. All profits and total comprehensive profit for the period are attributable to the owners of the Company. The Group has no recognised gains or losses other than those dealt with in the Statement of Comprehensive Income. The accompanying notes on pages 34 - 55 form an integral part of these financial statements. The financial statements were approved by the Board of Directors on 12 June 2018 and signed on its behalf by: On behalf of the Board Christian Schaffalitzky ________________________ Noel O’Keeffe ________________________ 17 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 17 • • • • • • the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and Matters on which we are required to report by exception the Directors’ Report has been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors’ Report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2014 requires us to report to you if, in our opinion: adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or the financial statements are not in agreement with the accounting records and returns; or certain disclosures of Directors’ remuneration specified by law are not made; or Responsibilities of Directors we have not received all the information and explanations we require for our audit. As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Richard Collis (Senior Statutory Auditor) for and on behalf of Saffery Champness LLP Chartered Accountants Statutory Auditors 71 Queen Victoria Street London EC4V 4BE 12 June 2018 16 KIBO MINING PLC CONSOLIDATED STATEMENT OF FINANCIAL POSITION ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 All figures are stated in Sterling Assets Non-Current Assets Property, plant and equipment Intangible assets Total non-current assets Current Assets Trade and other receivables Cash Total current assets Total Assets Equity and Liabilities Equity Called up share capital Share premium account Control reserve Share based payment reserve Translation reserve Attributable to equity holders of the parent Retained deficit GROUP 31 December 2017 Audited £ Note 31 December 2016 Audited £ 10 11 13 14 15 15 16 17 18 7,650 17,596,105 9,107 17,596,105 17,603,755 17,605,212 59,046 766,586 50,633 382,339 825,632 432,972 18,429,387 18,038,184 14,015,670 28,469,750 2,097,442 556,086 (268,506) (26,534,653) 18,335,789 (1,383,388) 16,952,401 13,603,965 27,318,262 - 514,279 (285,491) (23,625,367) 17,525,648 (1,435) 17,524,213 Total Equity Non-controlling interest 19 Liabilities Current Liabilities Trade and other payables Borrowings Provisions Total Current Liabilities Total Equity and Liabilities 20 21 22 266,218 1,210,768 - 146,380 251,928 115,663 1,476,986 18,429,387 513,971 18,038,184 The accompanying notes on pages 34 - 55 form an integral part of these financial statements. The financial statements were approved by the Board of Directors on 12 June 2018 and signed on its behalf by: On behalf of the Board Christian Schaffalitzky ________________________ Noel O’Keeffe ________________________ KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 18 18 All figures are stated in Sterling Assets Non-Current Assets Property, plant and equipment Intangible assets Total non-current assets Current Assets Trade and other receivables Cash Total current assets Total Assets Equity and Liabilities Equity Called up share capital Share premium account Control reserve Share based payment reserve Retained deficit Total Equity Liabilities Current Liabilities Trade and other payables Borrowings Provisions Total Current Liabilities Total Equity and Liabilities Translation reserve Attributable to equity holders of the parent Non-controlling interest 19 10 11 13 14 15 15 16 17 18 20 21 22 59,046 766,586 50,633 382,339 825,632 432,972 18,429,387 18,038,184 14,015,670 28,469,750 2,097,442 556,086 (268,506) 13,603,965 27,318,262 - 514,279 (285,491) (26,534,653) (23,625,367) 18,335,789 (1,383,388) 16,952,401 17,525,648 (1,435) 17,524,213 266,218 1,210,768 - 146,380 251,928 115,663 1,476,986 513,971 18,429,387 18,038,184 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 CONSOLIDATED STATEMENT OF FINANCIAL POSITION KIBO MINING PLC COMPANY STATEMENT OF FINANCIAL POSITION ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 GROUP 31 December 2017 Audited Note £ 31 December 2016 Audited £ All figures are stated in Sterling Non-Current Assets 7,650 9,107 17,596,105 17,596,105 Investments in group undertakings Trade and other receivables Total Non- current assets 17,603,755 17,605,212 Current Assets Trade and other receivables Cash Total Current assets Total Assets Equity and Liabilities Equity Called up share capital Share premium Share based payment reserve Translation reserves Total Equity Retained deficit Liabilities Current Liabilities Trade and other payables Borrowings Provisions Total liabilities Total Equity and Liabilities Company 31 December 2017 Audited £ 3,468,224 24,402,788 31 December 2016 Audited £ 1,700,000 26,998,867 27,871,012 28,698,867 413 5,690 690 22,082 6,103 22,772 27,877,115 28,721,639 14,015,670 28,469,750 514,279 14,723 (16,434,811) 26,579,611 13,603,965 27,318,262 514,279 47,430 (13,164,891) 29,271,864 86,736 1,210,768 - 35,003 251,928 115,663 1,297,504 27,877,115 402,594 28,721,639 23 13 13 14 15 15 17 18 20 21 22 The accompanying notes on pages 34 - 55 form integral part of these financial statements. The financial statements were approved by the Board of Directors on 12 June 2018 and signed on its behalf by: On behalf of the Board The accompanying notes on pages 34 - 55 form an integral part of these financial statements. The financial statements were approved by the Board of Directors on 12 June 2018 and signed on its behalf by: On behalf of the Board Christian Schaffalitzky ________________________ Noel O’Keeffe ________________________ Christian Schaffalitzky ________________________ Noel O’Keeffe ________________________ 18 19 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 19 l a t o T y t i u q e g n i l l o r t n o c - n o N d e n i a t e R t s e r e t n i t i c i f e d y c n e r r u c n g i e r o F e v r e s e r n o i t a l s n a r t l o r t n o C e v r e s e r d e s a b e r a h S y r u s a e r T e r a h S e v r e s e r t n e m y a p s e r a h s m u i m e r p e r a h S l a t i p a C 7 1 0 2 R E B M E C E D 1 3 D E D N E R A E Y E H T R O F S T N E M E T A T S L A I C N A N I F L A U N N A Y T I U Q E N I S E G N A H C F O T N E M E T A T S D E T A D I L O S N O C C L P G N I N I M O B I K £ £ £ £ £ £ £ £ P U O R G , 7 1 6 6 3 5 7 1 - , , ) 6 8 3 1 4 5 1 2 ( , ) 9 1 6 4 8 3 ( , 9 7 2 4 1 5 , ) 4 6 4 4 4 ( , , 9 1 5 2 8 7 5 2 , , 8 8 2 0 1 2 3 1 , g n i l r e t S n i d e t a t s e r a s e r u g i f 6 1 0 2 y r a u n a J 1 t a s a e c n a l a B A l l - 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e m o c n i e v i s n e h e r p m o c r e h t O s n o i t a r e p o n g i e r o f g n i t a l s n a r t n o d o i r e p t n e r r u c e h t g n i r u d d e u s s i s n o i t p o e r a h S r a e y e h t r o f s s o L , 6 7 8 5 3 3 1 , , 7 7 6 3 9 3 l a t i p a c e r a h s f o e u s s i e r a h s f o s d e e c o r P , 7 6 8 9 9 1 , , 3 4 7 5 3 5 1 2 6 2 8 1 3 7 2 , , - , 7 7 6 3 9 3 , 5 6 9 3 0 6 3 1 , 6 1 0 2 r e b m e c e D 1 3 t a s a e c n a l a B s e r a h s y r u s a e r t f o t n e m t o l l A - - - - - - - - s e c n e r e f f i d e g n a h c x e - e m o c n i e v i s n e h e r p m o c r e h t O y r a i d i s b u s f o n o i t i s i u q c a m o r f g n i s i r a t n e m t s u d A j s n o i t a r e p o n g i e r o f g n i t a l s n a r t n o d o i r e p t n e r r u c e h t g n i r u d d e u s s i s n o i t p o e r a h S r a e y e h t r o f s s o L , 8 8 4 1 5 1 1 , , 5 0 7 1 1 4 l a t i p a c e r a h s f o e u s s i e r a h s f o s d e e c o r P , , 8 8 4 1 5 1 1 0 5 7 9 6 4 8 2 , , , 5 0 7 1 1 4 , 0 7 6 5 1 0 4 1 , s e r a h s y r u s a e r t f o t n e m t o l l A 9 1 8 1 7 1 5 1 5 1 5 1 y b f l a h e b s t i n o d e n g i s d n a 8 1 0 2 e n u J 2 1 n o s r o t c e r i D f o d r a o B e h t y b d e v o r p p a e r e w s d t n r a e o m B e t e a h t s t f l a o i c f l n a a h n e i f b e n h O T . s t n e m e t a t s l a i c n a n i f e h t f o t r a p m r o f 5 5 - 4 3 s e g a p n o s e t o n e h T 0 2 0 2 7 1 0 2 s t n u O C C A d n A t R O P e R L A u n n A C L P g n n M O B K I I I _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ e f f e e K O ’ l e o N _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ y k z t i l a f f a h c S n a i t s i r h C 7 1 0 2 R E B M E C E D 1 3 D E D N E R A E Y E H T R O F S T N E M E T A T S L A I C N A N I F L A U N N A Y T I U Q E N I S E G N A H C F O T N E M E T A T S Y N A P M O C C L P G N I N I M O B I K y t i u q e l a t o T t i c i f e d d e n i a t e R n g i e r o F y c n e r r u c n o i t a l s n a r t e v r e s e r t n e m y a p e v r e s e r s e r a h s d e s a b e r a h S y r u s a e r T m u i m e r p e r a h S l a t i p a c e r a h S £ £ £ £ £ £ £ , 9 1 5 2 8 7 5 2 , , 8 8 2 0 1 2 3 1 , g n i l r e t S n i d e t a t s e r a s e r u g i f l l A 6 1 0 2 y r a u n a J 1 t a e c n a l a B Y N A P M O C , 4 6 8 1 7 2 9 2 , , ) 7 5 2 3 4 2 0 1 ( , , ) 4 3 6 1 2 9 2 ( , - - ) 9 6 0 5 ( , , 3 5 5 9 2 7 1 , , 1 3 3 4 4 2 , ) 9 1 8 2 5 9 ( , 5 4 0 9 1 3 8 2 , - - ) 7 0 7 2 3 ( , , ) 0 2 9 9 6 2 3 ( , , 3 9 1 3 6 5 1 , , ) 4 3 6 1 2 9 2 ( , - - - - - - - - - , , ) 4 3 6 1 2 9 2 ( ) 1 9 8 4 6 1 3 1 ( , , , ) 0 2 9 9 6 2 3 ( , , , 1 1 6 9 7 5 6 2 ) 4 3 4 9 3 7 1 ( , , , , ) 0 2 9 9 6 2 3 ( ) 1 1 8 4 3 4 6 1 ( , , - - - - ) 9 6 0 5 ( , - - - - - - - - - - 9 9 4 2 5 , 9 7 2 4 1 5 , ) 4 6 4 4 4 ( , - 0 3 4 7 4 ) 9 6 0 5 ( , , - - 9 7 2 4 1 5 , - 4 6 4 4 4 , 4 6 4 4 4 , - - - - ) 7 0 7 2 3 ( , - - - - - 3 2 7 4 1 , ) 7 0 7 2 3 ( , 9 7 2 4 1 5 , - - - - - - - - - - - - , 6 7 8 5 3 3 1 , - - - - , 7 6 8 9 9 1 , 3 4 7 5 3 5 1 , 2 6 2 8 1 3 7 2 , , , 8 8 4 1 5 1 1 , - - - - , 7 7 6 3 9 3 s n o i t a r e p o n g i e r o f g n i t a l s n a r t n o s e c n e r e f f i d e g n a h c x e - s s o l e v i s n e h e r p m o c r e h t O d o i r e p e h t g n i r u d d e l l e c n a c r o d e r i p x e s t n a r r a w d n a s n o i t p o e r a h S r a e y e h t r o f s s o L d o i r e p t n e r r u c e h t g n i r u d d e u s s i s n o i t p o e r a h S l a t i p a c e r a h s f o e u s s i f o s d e e c o r P - , 7 7 6 3 9 3 , 5 6 9 3 0 6 3 1 , 6 1 0 2 r e b m e c e D 1 3 t a e c n a l a B s e r a h s y r u s a e r t f o t n e m t o l l A - - - - , 5 0 7 1 1 4 s n o i t a r e p o n g i e r o f g n i t a l s n a r t n o s e c n e r e f f i d e g n a h c x e - s s o l e v i s n e h e r p m o c r e h t O r a e y e h t r o f s s o L d o i r e p e h t g n i r u d d e l l e c n a c r o d e r i p x e s t n a r r a w d n a s n o i t p o e r a h S d o i r e p t n e r r u c e h t g n i r u d d e u s s i s n o i t p o e r a h S l a t i p a c e r a h s f o e u s s i f o s d e e c o r P , 8 8 4 1 5 1 1 , , 0 5 7 9 6 4 8 2 , , 5 0 7 1 1 4 , 0 7 6 5 1 0 4 1 , 7 1 0 2 r e b m e c e D 1 3 t a e c n a l a B s e r a h s y r u s a e r t f o t n e m t o l l A e t o N 7 1 0 2 s t n u O C C A d n A t R O P e R L A u n n A C L P g n n M O B K I I I 1 2 1 2 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ e f f e e K O ’ l e o N y k z t i l a f f a h c S n a i t s i r h C _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 8 1 7 1 5 1 5 1 5 1 y b f l a h e b s t i n o d e n g i s d n a 8 1 0 2 e n u J 2 1 n o s r o t c e r i D f o d r a o B e h t y b d e v o r p p a e r e w s d t n r a e o m B e t e a h t s t f l a o i c f l n a a h n e i f b e n h O T . s t n e m e t a t s l a i c n a n i f e s e h t f o t r a p l a r g e t n i n a m r o f 5 5 - 4 3 s e g a p n o s e t o n g n i y n a p m o c c a e h T KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 CONSOLIDATED STATEMENT OF CASH FLOWS All figures are stated in Sterling Cash flows from operating activities Loss for the period before taxation Adjustments for: Foreign exchange gain Depreciation on property, plant and equipment Investment income Share based remuneration to directors Deal cost settled in shares Movement in provisions Liabilities settled in shares Deemed cost of listing Movement in working capital (Increase)/Decrease in debtors Increase/(Decrease) in creditors Net cash outflows from operating activities Cash flows from financing activities Proceeds of issue of share capital Repayment of borrowings Proceeds from borrowings Net cash proceeds from financing activities Investment income Cash flows from investing activities Net cash flow from acquisition of subsidiaries Net cash flows investing activities Purchase of property, plant and equipment Net increase in cash Cash at beginning of period Cash at end of the period GROUP 31 December 2017 Audited £ Notes 31 December 2016 Audited £ (4,519,813) (3,585,416) 249,437 2,738 - 260,000 155,539 (115,663) - 206,680 (3,761,082) 124,884 8,228 (1,815) - - 115,663 1,648,004 - (1,690,452) (8,413) 119,838 111,425 (3,649,657) 500,059 (160,417) 339,642 (1,350,810) 1,818,345 - 1,751,326 - 3,569,671 - (200,000) 1,751,928 1,815 1,553,743 465,408 (1,175) 464,233 384,247 382,339 (1,000) (9,029) (10,029) 192,904 189,435 766,586 382,339 10 3 6 22 17 13 20 15 3 12 14 The accompanying notes on pages 34 - 55 form an integral part of these financial statements. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2016 22 22 Cash flows from operating activities Loss for the period before taxation Adjustments for: Foreign exchange gain Depreciation on property, plant and equipment Investment income Share based remuneration to directors Deal cost settled in shares Movement in provisions Liabilities settled in shares Deemed cost of listing Movement in working capital (Increase)/Decrease in debtors Increase/(Decrease) in creditors Net cash outflows from operating activities Cash flows from financing activities Proceeds of issue of share capital Repayment of borrowings Proceeds from borrowings Net cash proceeds from financing activities Investment income Cash flows from investing activities Net cash flow from acquisition of subsidiaries Net cash flows investing activities Purchase of property, plant and equipment Net increase in cash Cash at beginning of period Cash at end of the period GROUP 31 December 2017 Audited £ 31 December 2016 Audited £ (4,519,813) (3,585,416) Notes 124,884 8,228 (1,815) 249,437 2,738 - 260,000 155,539 (115,663) 115,663 - 1,648,004 206,680 (3,761,082) (1,690,452) (8,413) 119,838 111,425 500,059 (160,417) 339,642 (3,649,657) (1,350,810) - - - - 1,818,345 1,751,326 - - 3,569,671 (200,000) 1,751,928 1,815 1,553,743 465,408 (1,175) 464,233 384,247 382,339 (1,000) (9,029) (10,029) 192,904 189,435 766,586 382,339 10 3 6 22 17 13 20 15 3 12 14 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 CONSOLIDATED STATEMENT OF CASH FLOWS COMPANY STATEMENT OF CASH FLOWS All figures are stated in Sterling All figures are stated in Sterling Cash flows from operating activities Loss for the period before taxation Adjusted for: Liabilities settled in shares Share based remuneration to directors Impairment of investment in subsidiary Movement in provisions Foreign exchange gain Movement in working capital Decrease in debtors Increase /(decrease)in creditors Net cash outflows from operating activities Cash flows from financing activities Proceeds of issue of share capital Repayment of borrowings Net cash proceeds from financing activities Proceeds from borrowings Cash flows from investing activities Net cash used in investing activities Cash advances to Group Companies Net (decrease)/increase in cash Cash at beginning of period Cash at end of the period COMPANY 31 December 2017 Audited £ Notes 31 December 2016 Audited £ (3,269,920) (2,921,634) - 195,000 1,891,777 (115,663) - (1,298,806) 1,648,004 - 115,663 20,789 (1,137,178) 277 51,733 52,010 (1,246,796) 522,414 (131,867) 390,547 (746,631) 500,000 - 1,748,840 2,248,840 - (200,000) 1,751,928 1,551,928 (1,018,436) (1,018,436) (786,598) (786,598) (16,392) 22,082 18,699 3,383 5,690 22,082 17 22 13 20 15 13 14 The accompanying notes on pages 34 - 55 form an integral part of these financial statements. The accompanying notes on pages 34 - 55 form an integral part of these financial statements. 22 23 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2016 23 KIBO MINING PLC SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 General Information Kibo Mining Plc (“the Company”) is a Company incorporated in Ireland. The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the “Group”). The principal activities of the Company and its subsidiaries are related to the exploration for and development of coal and other minerals in Tanzania. The figures in the financial statements are presented in Sterling unless otherwise stated. Statement of Compliance As permitted by the European Union, the Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and their interpretations issued by the International Accounting Standards Board (IASB) as adopted by the EU (IFRS). The individual financial statements of the Company (“Company financial statements”) have been prepared in accordance with the Companies Act 2014 which permits a Company that publishes its Company and Group financial statements together, to take advantage of the exemption in Section 293 of the Companies Act 2014, from presenting to its members its Company Income Statement and related notes that form part of the approved Company financial statements. The IFRS adopted by the EU as applied by the Company and the Group in the preparation of these financial statements are those that were effective at 31 December 2017. Statement of Accounting Policies The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements. Basis of Preparation The Group and Company financial statements are prepared on the historical cost basis, except for the measurement of certain financial instruments which is measured at fair value. The accounting policies have been applied consistently by Group entities, except for the adoption of new standards and interpretations which became effective in the current year. The Group and Company financial statements have been prepared on a going concern basis as explained on page 8. Use of Estimates and Judgements The preparation of financial statements in conformity with EU IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. In particular, there are significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements in the following areas: • • • • • Exploration and evaluation expenditure; Recoverability of group loans in the parent Company; Fair value determination; Residual values and useful lives of property, plant and equipment; and Taxation. Exploration and evaluation expenditure The Group’s accounting policy for exploration and evaluation expenditure results in the capitalisation of certain intangible mineral resources which are identified through business combinations or equivalent acquisitions. This policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular whether an economically viable extraction operation can be established based on the separately identified mineral resources. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised the intangible mineral resources under the policy, a judgement is made that recovery of the intangible asset is unlikely, the relevant capitalised amount will be written off to the income statement. Recoverability of group loans in the parent Company The realisation of amounts due from Group undertakings is dependent on the discovery of economic reserves including the ability of the Group to raise sufficient finance to develop the projects in order to settle the group loan balance receivable. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 24 24 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES KIBO MINING PLC SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 General Information Fair value determination Kibo Mining Plc (“the Company”) is a Company incorporated in Ireland. The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the “Group”). The principal activities of the Company and its subsidiaries are related to the exploration for and development of coal and other minerals in Tanzania. The figures in the financial statements are presented in Sterling unless otherwise stated. Statement of Compliance As permitted by the European Union, the Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and their interpretations issued by the International Accounting Standards Board (IASB) as adopted by the EU (IFRS). The individual financial statements of the Company (“Company financial statements”) have been prepared in accordance with the Companies Act 2014 which permits a Company that publishes its Company and Group financial statements together, to take advantage of the exemption in Section 293 of the Companies Act 2014, from presenting to its members its Company Income Statement and related notes that form part of the approved Company financial statements. The IFRS adopted by the EU as applied by the Company and the Group in the preparation of these financial statements are those that were effective at 31 December 2017. Statement of Accounting Policies The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements. Basis of Preparation The Group and Company financial statements are prepared on the historical cost basis, except for the measurement of certain financial instruments which is measured at fair value. The accounting policies have been applied consistently by Group entities, except for the adoption of new standards and interpretations which became effective in the current year. The Group and Company financial statements have been prepared on a going concern basis as explained on page 8. Use of Estimates and Judgements The preparation of financial statements in conformity with EU IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. In particular, there are significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements in the following areas: • • • • • Exploration and evaluation expenditure; Recoverability of group loans in the parent Company; Fair value determination; Residual values and useful lives of property, plant and equipment; and Exploration and evaluation expenditure Taxation. The Group’s accounting policy for exploration and evaluation expenditure results in the capitalisation of certain intangible mineral resources which are identified through business combinations or equivalent acquisitions. This policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular whether an economically viable extraction operation can be established based on the separately identified mineral resources. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised the intangible mineral resources under the policy, a judgement is made that recovery of the intangible asset is unlikely, the relevant capitalised amount will be written off to the income statement. Recoverability of group loans in the parent Company The realisation of amounts due from Group undertakings is dependent on the discovery of economic reserves including the ability of the Group to raise sufficient finance to develop the projects in order to settle the group loan balance receivable. 24 The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price. The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the group for similar financial instruments. A number of the group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. i) Property, plant and equipment The fair value of property, plant and equipment recognised as a result of a business combination is based on market values. The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of items of plant, equipment, fixtures and fittings is based on the market approach and cost approaches using quoted market prices for similar items when available, and replacement cost when appropriate. ii) Trade and other receivables The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes. iii) Share-based payment transactions The fair value of employee share options is measured using the Black-Scholes formula. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility, adjusted for changes expected due to publicly available information), weighted average expected life of the instrument (based on the rules of the share incentive scheme), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value. Residual values and useful lives of property, plant and equipment The useful economic lives, depreciation method and residual values of items of property, plant and equipment and tangible assets are estimated annually. The actual lives, depreciation method and residual values may vary depending on a variety of factors and circumstances. Taxation Assessing the recoverability of deferred income tax assets requires the Company to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realise the net deferred tax assets recorded at the end of the reporting period could be impacted. Revenue Recognition Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value added tax. Interest is recognised, in profit or loss, using the effective interest rate method. Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. 25 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 25 KIBO MINING PLC SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Consolidation The consolidated financial statements comprise the financial statements of Kibo Mining Plc and its subsidiaries for the year ended 31 December 2017, over which the Company has control. • Control is achieved when the Company: • has the power over the investee; • is exposed, or has rights, to variance return from its involvement with the investee; and has the ability to use its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstance indicate that there are changes to one or more of the three elements of control listed above. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. Subsidiaries are fully consolidated from the date that control commences until the date that control ceases. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Intragroup balances and any unrealised gains or losses or income or expenses arising from intragroup transactions are eliminated in preparing the Group financial statements, except to the extent they provide evidence of impairment. The Group accounts for business combinations using the acquisition method of accounting. The cost of the business combination is measured as the aggregate of the fair values of assets given, liabilities incurred or assumed and equity instruments issued. Costs directly attributable to the business combination are expensed as incurred, except the costs to issue debt which are amortised as part of the effective interest and costs to issue equity which are included in equity. The acquiree's identifiable assets, liabilities and contingent liabilities which meet the recognition conditions of IFRS 3 Business Combinations are recognised at their fair values at acquisition date. Contingent liabilities are only included in the identifiable assets and liabilities of the acquiree where there is a present obligation at acquisition date. Non-controlling interest arising from a business combination is measured either at their share of the fair value of the assets and liabilities of the acquiree or at fair value. The treatment is not an accounting policy choice but is selected for each individual business combination, and disclosed in the note for business combinations. Changes in the Group’s interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions. Upon the loss of control, the Company derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any resulting gain or loss is recognised in profit or loss. If the Company retains any interest in the previous subsidiary, such interest is measured at fair value at the date that control is lost. Any gain from the acquisition of a subsidiary or gain/loss from the disposal of subsidiary will be recognised through profit and loss in the current financial period. Business combinations involving entities under common control Business combinations involving entities under common control comprise business combinations where both entities remain under the ultimate control of the holding company before and after the combination, and that control is not transitory. The group applies merger accounting for all its common control transactions from the date that it obtains • control. In terms of this: • • the assets and liabilities of the acquiree are recorded at their existing carrying amounts (not fair value); if necessary, adjustments are made to achieve uniform accounting policies; intangible assets and contingent liabilities are recognised only to the extent that they were recognised by the acquiree in accordance with applicable IFRS; no goodwill is recognised. Any difference between the acquirer’s cost of investment and the acquiree’s equity is presented separately directly in equity as a common control reserve (CCR) on consolidation; • KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 26 26 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES KIBO MINING PLC SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Consolidation The consolidated financial statements comprise the financial statements of Kibo Mining Plc and its subsidiaries for the year ended 31 December 2017, over which the Company has control. • • • Control is achieved when the Company: has the power over the investee; is exposed, or has rights, to variance return from its involvement with the investee; and has the ability to use its power to affect its returns. • • any non-controlling interest is measured as a proportionate share of the carrying amounts of the related assets and liabilities (as adjusted to achieve uniform accounting policies); and any expenses of the combination are written off immediately in profit or loss, except for the costs to issue debt which are amortised as part of the effective interest and costs to issue equity which are recognised within equity. When control is lost, resulting in the common control of entities, the balance of CCR recognised in respect of that acquisition is realised directly to retained earnings on the effective date when control is lost. Goodwill The Company reassesses whether or not it controls an investee if facts and circumstance indicate that there are changes to one or more of the three elements of control listed above. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. Subsidiaries are fully consolidated from the date that control commences until the date that control ceases. Goodwill arising from the acquisition of a subsidiary represents the excess of the cost of the acquisition over the Group's interest in the net of fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary recognised at the date of acquisition. Goodwill is initially measured at cost and is subsequently measured at cost less any accumulated impairment losses. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies Goodwill is tested for impairment on an annual basis. Intangible Assets adopted by the Group. An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows. Amortisation is not provided for these intangible assets but they are tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired, and it is subsequently carried at cost less accumulated impairment losses. Intangible assets comprise the acquisition of rights to explore in relation to the Group’s exploration and evaluation activities. Intangible assets comprise fair value allocated to exploration projects purchased through business combination for which no useful life has been accurately determined. Irrespective of whether there is any indication of impairment, the Group also tests intangible assets not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount. This impairment test is performed during the annual period and at the same time every period. Exploration & Evaluation Assets Exploration and evaluation activity involves the search for mineral resources, the determination of technical feasibility and the assessment of commercial viability of an identified resource. Exploration and evaluation activity includes: • researching and analysing historical exploration data; • gathering exploration data through topographical, geochemical and geophysical studies; • exploratory drilling, trenching and sampling; • determining and examining the volume and grade of the resource; • surveying transportation and infrastructure requirements; and • conducting market and finance studies. Exploration and evaluation expenditure is charged to the income statement as incurred except in the following circumstances, in which case the expenditure may be capitalised: • In respect of minerals activities: - - the exploration and evaluation activity is within an area of interest which was previously acquired as an asset acquisition or in a business combination and measured at fair value on acquisition; or the existence of a commercially viable mineral deposit has been established. Capitalised exploration and evaluation expenditure considered to be tangible is recorded as a component of property, plant and equipment at cost less impairment charges. Otherwise, it is recorded as an intangible. Intragroup balances and any unrealised gains or losses or income or expenses arising from intragroup transactions are eliminated in preparing the Group financial statements, except to the extent they provide evidence of impairment. The Group accounts for business combinations using the acquisition method of accounting. The cost of the business combination is measured as the aggregate of the fair values of assets given, liabilities incurred or assumed and equity instruments issued. Costs directly attributable to the business combination are expensed as incurred, except the costs to issue debt which are amortised as part of the effective interest and costs to issue equity which are included in equity. The acquiree's identifiable assets, liabilities and contingent liabilities which meet the recognition conditions of IFRS 3 Business Combinations are recognised at their fair values at acquisition date. Contingent liabilities are only included in the identifiable assets and liabilities of the acquiree where there is a present obligation at acquisition date. Non-controlling interest arising from a business combination is measured either at their share of the fair value of the assets and liabilities of the acquiree or at fair value. The treatment is not an accounting policy choice but is selected for each individual business combination, and disclosed in the note for business combinations. Changes in the Group’s interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions. Upon the loss of control, the Company derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any resulting gain or loss is recognised in profit or loss. If the Company retains any interest in the previous subsidiary, such interest is measured at fair value at the date that control is lost. Any gain from the acquisition of a subsidiary or gain/loss from the disposal of subsidiary will be recognised through profit and loss in the current financial period. Business combinations involving entities under common control Business combinations involving entities under common control comprise business combinations where both entities remain under the ultimate control of the holding company before and after the combination, and that control is not transitory. The group applies merger accounting for all its common control transactions from the date that it obtains control. In terms of this: • • • • the assets and liabilities of the acquiree are recorded at their existing carrying amounts (not fair value); if necessary, adjustments are made to achieve uniform accounting policies; intangible assets and contingent liabilities are recognised only to the extent that they were recognised by the acquiree in accordance with applicable IFRS; no goodwill is recognised. Any difference between the acquirer’s cost of investment and the acquiree’s equity is presented separately directly in equity as a common control reserve (CCR) on consolidation; 26 Intangible assets all relate to exploration and evaluation expenditure which are carried at cost with an indefinite useful life and therefore are reviewed for impairment annually and when there are indicators of impairment. Where a potential impairment is indicated, assessment is performed for each area of interest in conjunction with the group of operating assets (representing a cash generating unit) to which the exploration is attributed. Exploration areas at which reserves have been discovered but require major capital expenditure before production can begin, are continually evaluated to ensure that commercial quantities of reserves exist or to ensure that additional exploration work is under way or planned. 27 27 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 KIBO MINING PLC SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Impairment Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events had a negative effect on the estimated future cash flows for that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. Significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in the profit or loss. Non-financial assets Assets are reviewed for impairment at each reporting date or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in the Statement of Comprehensive Income immediately. Property, Plant and Equipment Property, Plant and Equipment is stated at cost, less accumulated depreciation. Cost includes expenditure that is directly attributable to the acquisition of the items of property, plant and equipment. The cost of self-constructed items of property, plant and equipment includes the cost of materials and direct labour, any other costs directly attributable to bringing the items of property, plant and equipment to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Depreciation is provided at rates calculated to write off the cost less residual value of each asset over its expected useful life, as follows: Office equipment between 12.5% to 37.5% straight line; Plant & machinery at 20% straight line; Furniture & fixtures at 12.5% straight line; - - - - Motor vehicles at 25% straight line; and I.T. Equipment at 20% straight line - Depreciation methods, useful lives and residual values are reviewed at each reporting date. Useful lives are affected by technology innovations, maintenance programmes and future economic benefits. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. On disposal of property, plant and equipment the cost and the related accumulated depreciation and impairments are removed from the financial statements and the net amount, less any proceeds, is taken to the Statement of Comprehensive Income. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 28 28 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES KIBO MINING PLC SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Impairment Financial assets Income Tax A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events had a negative effect on the estimated future cash flows for that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. Significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in the profit or loss. Non-financial assets Assets are reviewed for impairment at each reporting date or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in the Statement of Comprehensive Income immediately. Property, Plant and Equipment Property, Plant and Equipment is stated at cost, less accumulated depreciation. Cost includes expenditure that is directly attributable to the acquisition of the items of property, plant and equipment. The cost of self-constructed items of property, plant and equipment includes the cost of materials and direct labour, any other costs directly attributable to bringing the items of property, plant and equipment to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Depreciation is provided at rates calculated to write off the cost less residual value of each asset over its expected useful life, as follows: Office equipment between 12.5% to 37.5% straight line; - - - - Plant & machinery at 20% straight line; Furniture & fixtures at 12.5% straight line; - Motor vehicles at 25% straight line; and I.T. Equipment at 20% straight line Depreciation methods, useful lives and residual values are reviewed at each reporting date. Useful lives are affected by technology innovations, maintenance programmes and future economic benefits. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. On disposal of property, plant and equipment the cost and the related accumulated depreciation and impairments are removed from the financial statements and the net amount, less any proceeds, is taken to the Statement of Comprehensive Income. Income tax expense comprises current and deferred tax. Income tax expense is recognised in the Income Statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised. Employee benefits Defined contribution plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods during which related services are rendered by employees. Pre-paid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that are made more than 12 months after the end of the period in which the employees render the service are discounted to their present value. Short-term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonuses or profit-sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. Foreign Currencies Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Sterling, which is the Group’s presentation currency. This is also the functional currency of the Group and Company and is considered by the Board also to be appropriate for the purposes of preparing the Group financial statements. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income. 28 29 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 29 KIBO MINING PLC SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Group companies The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • • • Monetary assets and liabilities for each Statement of Financial Position presented are presented at the closing rate at the date of that Statement of Financial Position. Non-monetary items are measured at the exchange rate in effect at the historical transaction date and are not translated at each Statement of Financial Position date; Income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transaction): and All resulting exchange differences are recognised as a separate component of equity. On consolidation, exchange differences arising from the translation of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future are taken to shareholders equity. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale. Issue Expenses and Share Premium Account Issue expenses are written off against the premium arising on the issue of share capital. Lease payments Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed. Finance income and expense Finance income comprises interest income on funds invested, dividend income, gains on the disposal of available-for- sale financial assets, and changes in the fair value of financial assets at fair value through profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend income is recognised in profit or loss on the date that the group’s right to receive payment is established, which in the case of listed securities is the ex-dividend date. Finance expenses comprise interest expense on borrowings, unwinding of discount on provisions, changes in the fair value of financial assets at fair value through profit or loss, impairment losses recognised on financial assets and losses on forward exchange contracts that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective interest method. Foreign currency gains and losses are reported on a nett basis. Earnings per Share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 30 30 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES KIBO MINING PLC SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Group companies • • • date; The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: Monetary assets and liabilities for each Statement of Financial Position presented are presented at the closing rate at the date of that Statement of Financial Position. Non-monetary items are measured at the exchange rate in effect at the historical transaction date and are not translated at each Statement of Financial Position Income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transaction): and All resulting exchange differences are recognised as a separate component of equity. On consolidation, exchange differences arising from the translation of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future are taken to shareholders equity. When a foreign operation is sold, such exchange differences are recognised in the income statement Issue Expenses and Share Premium Account as part of the gain or loss on sale. Issue expenses are written off against the premium arising on the issue of share capital. Lease payments Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed. Finance income and expense Finance income comprises interest income on funds invested, dividend income, gains on the disposal of available-for- sale financial assets, and changes in the fair value of financial assets at fair value through profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend income is recognised in profit or loss on the date that the group’s right to receive payment is established, which in the case of listed securities is the ex-dividend date. Finance expenses comprise interest expense on borrowings, unwinding of discount on provisions, changes in the fair value of financial assets at fair value through profit or loss, impairment losses recognised on financial assets and losses on forward exchange contracts that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective interest method. Foreign currency gains and losses are reported on a nett basis. Earnings per Share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. Financial Instruments Non-derivative financial assets The group initially recognises loans and receivables on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the transaction date at which the group becomes a party to the contractual provisions of the instrument. The group derecognises a financial asset when the contractual right to the cash flows from the asset expires, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that are created or retained by the group is recognised as a separate asset or liability. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the group has a legal right to offset the amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. The group classifies non-derivative financial assets into the following categories: financial assets at fair value, financial assets at amortised cost, or loans and receivables. Financial assets at amortised cost A financial asset is classified at amortised cost if the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise, on specific dates, to cash flows that are solely payments of principal and interest on principal amount outstanding. Financial assets at amortised cost are initially measured at fair value plus any directly attributable transaction cost. Subsequent to initial recognition, these financial assets are measured at amortised cost using the effective interest method, less any impairment losses. Cash Cash in the Statement of Financial Position comprise cash at bank and short term deposits with an original maturity of three months or less. Bank overdrafts that are repayable on demand and form part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Trade and other receivables / payables Trade and other receivables and payables are stated at cost less impairment, which approximates fair value given the short dated nature of these assets and liabilities. Non-derivative financial liabilities The group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities are recognised initially on the transaction date at which the group becomes a party to the contractual provisions of the instrument. The group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortised cost using the effective interest method. The group has the following non-derivative financial liabilities: loans and borrowings, bank overdrafts, and trade and other payables. Shareholder warrants The shareholder warrants entitle shareholders to a number of common shares based upon the number of shares they subscribed for at the date of issue of the warrant instrument. The warrants relate to a transaction with the equity holders as opposed to a transaction in exchange for any goods or services. The equity component of the instrument is not considered material and there is no liability component arising as a result of these warrants. Upon exercise of the warrant the proceeds received, net of attributable transaction costs, are credited to share capital and where appropriate share premium. 30 31 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 31 KIBO MINING PLC SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Share based payments For such grants of share options qualifying as equity-settled share based payments, the fair value as at the date of grant is calculated using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that are likely to vest, except where forfeiture is only due to market based conditions not achieving the threshold for vesting. Share capital Incremental costs directly attributable to the issue of ordinary shares and share options are recognised directly in equity. Segment reporting The group determines and presents operating segments based on the information that is internally provided to the Chief Executive Officer, who is the chief operating decision maker. A segment is a distinguishable component of the group that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and returns that are different from those of the other segments. The group’s primary format for segment reporting is based on business segments. The business segments are determined based on the reporting business units. Treasury shares The Company’s own equity instruments that are reacquired are recognised at cost and deducted from equity. No gain or loss is recognised in the Income Statement on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Voting rights related to treasury shares are nullified for the Group and no dividends are allocated to them. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 32 32 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES KIBO MINING PLC SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Share based payments NEW STANDARDS AND INTERPRETATIONS For such grants of share options qualifying as equity-settled share based payments, the fair value as at the date of grant is calculated using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that are likely to vest, except where forfeiture is only due to market based conditions not achieving the Incremental costs directly attributable to the issue of ordinary shares and share options are recognised directly in threshold for vesting. Share capital equity. Segment reporting The group determines and presents operating segments based on the information that is internally provided to the Chief Executive Officer, who is the chief operating decision maker. A segment is a distinguishable component of the group that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and returns that are different from those of the other segments. The group’s primary format for segment reporting is based on business segments. The business segments are determined based on the reporting business units. Treasury shares The Company’s own equity instruments that are reacquired are recognised at cost and deducted from equity. No gain or loss is recognised in the Income Statement on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Voting rights related to treasury shares are nullified for the Group and no dividends are allocated to them. Adoption of new and revised standards During the financial year, the Group has adopted the following new IFRSs (including amendments thereto) and IFRIC interpretations that became effective for the first time. Amendments to IAS 7 – Disclosure Initiative Amendments to IAS 12 – Recognition of Deferred Tax for Unrealised Losses 1 January 2017 1 January 2017 Standard Effective date, annual period beginning on or after Their adoption has not had any material impact on the disclosures or amounts reported in the financial statements. Standards issued but not yet effective: At the date of authorisation of these financial statements, the following standards and interpretations relevant to the Group and which have not been applied in these financial statements, were in issue but were not yet effective. In some cases these standards and guidance have not been endorsed for use in the European Union. Standard Effective date, annual period beginning on or after IFRS 9 Financial instruments IFRS 15 Revenue from contracts with Customers including amendments to IFRS 15: Effective date of IFRS 15. Clarifications to IFRS 15 -Revenue from contracts with Customers IFRS 2 (amendments) - Classification and Measurement of Share-based Payment Transactions IFRIC Interpretation 22 - Foreign Currency Transactions and Advance Consideration IFRS 16 Leases IFRIC 23 – Uncertainty over Income Tax Treatments Amendments to IAS 28 – Long-term Interests in Associates and Joint Ventures Annual improvements 2015-2017 cycle 1 January 2018 1 January 2018 1 January 2018 1 January 2018 1 January 2018 1 January 2019 1 January 2019 1 January 2019 1 January 2019 The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group, as the Group is primarily focused on exploration and development with no trading activities. 32 33 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 33 KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 1. Segment analysis IFRS 8 requires an entity to report financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments that meet specific criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the Chief Operating decision maker. The Chief Executive Officer is the Chief Operating decision maker of the Group. Management currently identifies two divisions as operating segments – mining and corporate. These operating segments are monitored and strategic decisions are made based upon them together with other non-financial data collated from exploration activities. Principal activities for these operating segments are as follows: Corporate Group Mining and Exploration Group 31 December 2017 (£) Group 2017 Group Revenue Administrative cost Capital raising fees Exploration expenditure Investment and other income Loss after tax Tax 2016 Group Revenue Administrative cost Capital raising fees Exploration expenditure Investment and other income Profit/ (Loss) after tax Tax 2017 Group Assets Segment assets Liabilities - - - (1,741,018) 1,445 - (1,739,573) - (1,871,697) (908,543) - - - (2,780,240) - (1,871,697) (908,543) (1,741,018) 1,445 - (4,519,813) Mining and Exploration Group Corporate Group 31 December 2016 (£) Group 18,039 - (1,716,967) 1,414,668 - (284,260) - (1,653,152) (1,648,004) - - - (3,301,156) 18,039 (1,653,152) (1,648,004) (1,716,967) 1,414,668 - (3,585,416) Mining Group Corporate Group 31 December 2017 (£) Group 18,423,284 6,103 18,429,387 Segment liabilities Other Significant items 264,562 1,297,504 1,562,066 Depreciation 2,738 - 2,738 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2016 34 34 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 NOTES TO THE ANNUAL FINANCIAL STATEMENTS KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 1. Segment analysis IFRS 8 requires an entity to report financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments that meet specific criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the Chief Operating decision maker. The Chief Executive Officer is the Chief Operating decision maker of the Group. Management currently identifies two divisions as operating segments – mining and corporate. These operating segments are monitored and strategic decisions are made based upon them together with other non-financial data collated from exploration activities. Principal activities for these operating segments are as follows: 2017 Group 31 December Mining and Exploration Group Corporate Group 2017 (£) Group 2016 Group Assets Segment assets Liabilities Mining Group Corporate Group 31 December 2016 (£) Group 18,015,412 22,772 18,038,184 Segment liabilities Other Significant items 111,376 402,595 513,971 Depreciation Revenue from major products and services 8,228 - 8,228 The only income that the Group received during the period related to revenue from management fees earned in Tanzania and bank interest, which has been allocated to the Mining & Exploration Group as defined in Note 1. Geographical segments The Group operates in six principal geographical areas – Corporate [Ireland, Cyprus, South Africa, Canada & United Kingdom] and Mining [Tanzania]. Major Operational indicators Tanzania Group Carrying value of segmented assets Loss after tax 18,423,284 (1,626,824) Major Operational indicators Carrying value of segmented assets Loss after tax Revenue 2. Management fees from exploration services Tanzania Group 17,605,212 (393,624) Ireland, United Kingdom, South Africa, Cyprus and Canada Group 31 December 2017 (£) Group 6,103 (2,892,989) Ireland, United Kingdom, South Africa, Cyprus and Canada Group 18,429,387 (4,519,813) 31 December 2016 (£) 432,972 (3,191,522) 31 December 2017 (£) 18,038,184 (3,585,146) 31 December 2016 (£) - - 18,039 18,039 Revenue Administrative cost Capital raising fees Exploration expenditure Investment and other income Loss after tax Tax 2016 Group Revenue Administrative cost Capital raising fees Exploration expenditure Investment and other income Profit/ (Loss) after tax Tax 2017 Group Assets Segment assets Liabilities - - - - - - - - - - - - - - (1,871,697) (908,543) (1,741,018) 1,445 - (1,871,697) (908,543) (1,741,018) 1,445 - (1,739,573) (2,780,240) (4,519,813) Mining and Exploration Group Corporate Group 31 December 2016 (£) Group 18,039 (1,716,967) 1,414,668 (1,653,152) (1,648,004) 18,039 (1,653,152) (1,648,004) (1,716,967) 1,414,668 - (284,260) (3,301,156) (3,585,416) Mining Group Corporate Group 31 December 2017 (£) Group 18,423,284 6,103 18,429,387 Segment liabilities Other Significant items 264,562 1,297,504 1,562,066 Depreciation 2,738 - 2,738 Management fee revenue relates to services provided to exploration and prospecting companies situated in Tanzania. 3. Investment and other Income Refund of exploration expenditure Profit on foreign exchange Other income 31 December 2017 (£) 31 December 2016 (£) - 463 1,445 982 1,332,306 80,547 1,414,668 1,815 34 35 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2016 35 KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 In 2016, the Group recovered £1,332,306 (US$1.8 million) relating to previously incurred exploration expenditure specific to the Mbeya Coal project from SEPCO III. During the previous financial period the Group concluded a revised agreement with SEPCO III allowing the China based EPC contractor to become the sole bidder for the ECP Contract subject to refunding the Group 50% of the total development cost incurred on the Mbeya Coal project, of which US$1.8 million was paid in 2016. The remaining balance of US$3.67 million is payable on conclusion of Financial Close of the project, against which a loan of US$2.9 million from Sanderson has been secured. 4. Profit on ordinary activities before taxation Operating loss is stated after the following key transactions: Depreciation of property, plant and equipment of Group financial statements Auditors’ remuneration for audit of Group and Company financial statements Auditors’ remuneration for audit of Sloane Developments Limited Auditors’ remuneration for non-audit services: 5. Staff costs (including Directors) Taxation advisory services Other non-audit services 31 December 2017 (£) Group 31 December 2016 (£) Group 2,738 35,000 2,500 1,750 2,000 8,228 35,000 2,500 1,750 2,000 Group 31 December 2017 (£) Group 31 December 2016 (£) Company 31 December 2017 (£) Company 31 December 2016 (£) Wages and salaries Share based remuneration 876,628 1,136,628 260,000 709,714 709,714 - 502,677 762,677 260,000 472,315 472,315 - The average monthly number of employees (including executive Directors) during the period was as follows: Group 31 December 2017 (£) Group 31 December 2016 (£) Company 31 December 2017 (£) Company 31 December 2016 (£) Exploration activities Administration 6. Directors’ emoluments 10 16 6 10 16 6 1 2 1 1 2 1 Group 31 December 2017 (£) Group 31 December 2016 (£) Company 31 December 2017 (£) Company 31 December 2016 (£) Basic salary and fees Share based payments 464,210 659,210 195,000 457,483 457,483 - 338,578 533,578 195,000 335,695 335,695 - KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 36 36 In 2016, the Group recovered £1,332,306 (US$1.8 million) relating to previously incurred exploration expenditure specific to the Mbeya Coal project from SEPCO III. During the previous financial period the Group concluded a revised agreement with SEPCO III allowing the China based EPC contractor to become the sole bidder for the ECP Contract subject to refunding the Group 50% of the total development cost incurred on the Mbeya Coal project, of which US$1.8 million was paid in 2016. The remaining balance of US$3.67 million is payable on conclusion of Financial Close of the project, against which a loan of US$2.9 million from Sanderson has been secured. Profit on ordinary activities before taxation 4. 31 December 2017 (£) Group 31 December 2016 (£) Group 2,738 35,000 2,500 1,750 2,000 8,228 35,000 2,500 1,750 2,000 Depreciation of property, plant and equipment of Group financial statements Auditors’ remuneration for audit of Group and Company financial statements Auditors’ remuneration for audit of Sloane Developments Limited Auditors’ remuneration for non-audit services: 5. Staff costs (including Directors) Taxation advisory services Other non-audit services Group Group Company Company 31 December 31 December 31 December 31 December 2017 (£) 2016 (£) 2017 (£) 2016 (£) Wages and salaries Share based remuneration 876,628 1,136,628 260,000 709,714 709,714 - 502,677 762,677 260,000 472,315 472,315 - The average monthly number of employees (including executive Directors) during the period was as follows: Group Company Company Group 31 December 31 December 31 December 31 December 2017 (£) 2016 (£) 2017 (£) 2016 (£) Exploration activities Administration 6. Directors’ emoluments 10 16 6 10 16 6 1 2 1 1 2 1 Group Group Company Company 31 December 31 December 31 December 31 December 2017 (£) 2016 (£) 2017 (£) 2016 (£) KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 NOTES TO THE ANNUAL FINANCIAL STATEMENTS KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 The emoluments of the Chairman were £13,135 (2016: £13,011). The emoluments of the highest paid director were £260,210 (2016: £193,610). Directors received shares to the value of £195,000 during the year (2016: £nil). Operating loss is stated after the following key transactions: 31 December 2017 Salary and fees £ Share based payments £ Key management personnel consist only of the Directors. Details of share options and interests in the Company’s shares of each director are shown in the Directors’ report on page 7. The following table summarises the remuneration applicable to each of the individuals who held office as a director during the reporting period: Christian Schaffalitzky Louis Coetzee Noel O’Keeffe Lukas Maree Wenzel Kerremans Total Andreas Lianos 31 December 2016 Christian Schaffalitzky Louis Coetzee Noel O’Keeffe Lukas Maree Wenzel Kerremans Total Andreas Lianos 13,135 195,210 125,632 13,772 13,115 464,210 103,346 - 65,000 65,000 - - 195,000 65,000 Salary and fees £ Share based payments £ 13,011 193,610 121,787 13,011 13,011 457,483 103,051 - - - - - - - Total £ 13,135 260,210 190,632 13,772 13,115 659,210 168,346 Total £ 13,011 193,610 121,787 13,011 13,011 457,483 103,051 £195,000 convertible loan notes were issued to directors of the Company who are also members of its executive committee on 27 September 2017. The loan notes issued were in lieu of bonus shares due as part of an interim award approved by the Kibo board on 24 April 2017. On 28 September 2017, these directors elected to convert their loan notes into Kibo shares. These resultant number of shares issued amount to 3,900,000 ordinary shares at an issue price of £0.05 per share, calculated in accordance with the Note Term Sheet. The movement in the salary and fees from 2016 to 2017 is as a result of exchange fluctuations emanating from payments made in EURO, converted to GBP for disclosure purposes in the Group’s presentational currency. 7. Taxation Basic salary and fees Share based payments 464,210 659,210 195,000 457,483 457,483 - 338,578 533,578 195,000 335,695 335,695 - Current tax 31 December 2017 (£) 31 December 2016 (£) Charge for the period in Ireland, Canada, Republic of South Africa, Cyprus, United Kingdom and Republic of Tanzania Total tax charge - - - - The difference between the total current tax shown above and the amount calculated by applying the standard rate of Irish corporation tax of 12.5% to the loss before tax is as follows: 2017 (£) (4,519,813) 2016 (£) (3,585,416) 36 Loss on ordinary activities before tax 37 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 37 KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Income tax expense calculated at 12.5% (2016: 12.5%) (564,977) (448,177) Income which is not taxable Expenses which are not deductible Losses available for carry forward Income tax expense recognised in the Statement of Comprehensive Income - 97,199 467,778 - - 209,235 238,942 - The effective tax rate used for the December 2017 and December 2016 reconciliations above is the corporate rate of 12.5% payable by corporate entities in Ireland on taxable profits under tax law in that jurisdiction. No provision has been made for the 2017 deferred taxation as no taxable income has been received to date, and the probability of future taxable income is indicative of current market conditions which remain uncertain. At the Statement of Financial Position date, the Directors estimate that the Group has unused tax losses of £21,876,379 (2016: £18,074,432) available for potential offset against future profits which equates to an estimated potential deferred tax asset of £2,734,547 (2016: £2,529,338). No deferred tax asset has been recognised due to the unpredictability of the future profit streams. Losses may be carried forward indefinitely in accordance with the applicable taxation regulations ruling within each of the above jurisdictions. 8. Loss of parent Company As permitted by Section 293 of the Companies Act 2014, the statement of comprehensive income of the parent Company has not been separately disclosed in these financial statements. The parent Company’s loss for the financial period was £3,269,920 (2016: £2,921,634). 9. Loss per share Basic loss per share The basic loss and weighted average number of ordinary shares used for calculation purposes comprise the following: Basic Loss per share 31 December 2017 (£) 31 December 2016 (£) Loss for the period attributable to equity holders of the parent Weighted average number of ordinary shares for the purposes of basic loss per share Basic loss per ordinary share Basic Dilutive Loss per share Loss for the period attributable to equity holders of the parent (3,712,707) (3,611,496) 372,255,127 (0.010) 351,080,645 (0.010) 31 December 2017 (£) 31 December 2016 (£) (3,712,707) (3,611,496) Weighted average number of ordinary shares for the purposes of basic loss per share 372,255,127 (0.010) 351,080,645 (0.010) Basic loss per ordinary share KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 38 38 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 NOTES TO THE ANNUAL FINANCIAL STATEMENTS KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Income tax expense calculated at 12.5% (2016: 12.5%) (564,977) (448,177) Income which is not taxable Expenses which are not deductible Losses available for carry forward Income tax expense recognised in the Statement of Comprehensive Income 97,199 467,778 - - 209,235 238,942 - - GROUP Cost Furniture and Fittings (£) Motor Vehicles (£) Office Equipment (£) I.T Equipment (£) Plant & Machinery (£) Total (£) 10. Property, plant and equipment The effective tax rate used for the December 2017 and December 2016 reconciliations above is the corporate rate of 12.5% payable by corporate entities in Ireland on taxable profits under tax law in that jurisdiction. No provision has been made for the 2017 deferred taxation as no taxable income has been received to date, and the probability of future taxable income is indicative of current market conditions which remain uncertain. At the Statement of Financial Position date, the Directors estimate that the Group has unused tax losses of £21,876,379 (2016: £18,074,432) available for potential offset against future profits which equates to an estimated potential deferred tax asset of £2,734,547 (2016: £2,529,338). No deferred tax asset has been recognised due to the unpredictability of the future profit streams. Losses may be carried forward indefinitely in accordance with the applicable taxation regulations ruling within each of the above jurisdictions. Loss of parent Company 8. As permitted by Section 293 of the Companies Act 2014, the statement of comprehensive income of the parent Company has not been separately disclosed in these financial statements. The parent Company’s loss for the financial period was £3,269,920 (2016: £2,921,634). Loss per share 9. Basic loss per share The basic loss and weighted average number of ordinary shares used for calculation purposes comprise the following: Basic Loss per share 31 December 31 December Loss for the period attributable to equity holders of the (3,712,707) (3,611,496) Weighted average number of ordinary shares for the purposes of basic loss per share Basic loss per ordinary share Basic Dilutive Loss per share 372,255,127 351,080,645 (0.010) (0.010) 31 December 31 December 2017 (£) 2016 (£) Loss for the period attributable to equity holders of the (3,712,707) (3,611,496) parent parent Weighted average number of ordinary shares for the purposes of basic loss per share 372,255,127 351,080,645 (0.010) (0.010) Basic loss per ordinary share Opening Cost as at 1 January 2016 100,516 77,399 20,778 15,570 4,707 218,970 Additions Additions through business combinations Disposals of subsidiaries Exchange movements Closing Cost as at 31 December 2016 198 - - 20,595 121,309 - 126,035 - 15,858 219,292 4,646 22,513 (6,501) 4,257 45,693 4,185 8,603 - 3,191 31,549 9,029 157,151 (6,501) 44,866 5,672 423,515 - - - 965 Additions Additions through business combinations Disposals Exchange movements Closing Cost as at 31 December 2017 1 1 - - 1,004 - - (6,521) 115,792 - - - (19,326) 199,966 - - - (7,285) 38,408 171 - - (5,026) 26,694 - 1,175 - - - - 1,745 (36,413) 7,417 388,277 Accumulated Depreciation (“Acc Depr”) Acc Depr as at 1 January 2016 Furniture and Fittings (£) Motor Vehicles (£) Office Equipment (£) I.T Equipment (£) Plant & Machinery (£) Total (£) 2017 (£) 2016 (£) 93,683 77,399 20,442 15,570 4,694 211,788 Additions through business combinations Disposals of subsidiaries Depreciation Exchange Movements Acc Depr as at 31 December 2016 - - 7,250 19,906 120,839 126,035 - - 15,858 219,292 22,057 (6,502) 433 4,230 40,660 8,603 - 529 3,243 27,945 156,695 (6,502) 8,227 44,200 5,672 414,408 - - 15 963 Additions through business combinations Disposals Depreciation Exchange movements Acc Depr as at 31 December 2017 - - 856 (6,897) 114,798 - - - (19,326) 199,966 - - 905 (7,333) 34,232 - - 977 (4,708) 24,214 - - - - 2,738 - (36,519) 1,745 7,417 380,627 Carrying Value Furniture and Fittings (£) Motor Vehicles (£) Office Equipment (£) I.T Equipment (£) Plant & Machinery (£) Total (£) Carrying value as at 31 December 2016 Carrying value as at 31 December 2017 470 994 - 5,033 - 4,176 3,604 2,480 - - 9,107 7,650 38 39 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 39 KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 11. Intangible assets Intangible assets consist solely of separately identifiable prospecting assets identified through business combinations, where these separately identifiable intangible assets will be recognised at fair value on acquisition date of said subsidiary. The following reconciliation serves to summarise the composition of intangible prospecting assets as at period end: Reconciliation of Intangible Assets Total (£) Pinewood Project (£) Mbeya Coal to Power Project (£) Lake Victoria Project (£) - 15,896,105 1,700,000 Haneti Project (£) Valuation as at 1 January 2016 Impairment of prospecting licences Carrying value as at 1 January 2017 Reversal of impairment of licences - - - - 15,896,105 1,700,000 - - - Impairment of prospecting licences Carrying value as at 31 December 2017 Reversal of impairment of licences - - - - 15,896,105 1,700,000 - - - - 17,596,105 - - - - - - - 17,596,105 - - 17,596,105 - Intangible assets are not amortised, due to the indefinite useful life which is attached to the underlying prospecting rights, until such time that active mining operations commence, which will result in the intangible asset being amortised over the useful life of the relevant mining licences. Intangible assets with an indefinite useful life are assessed for impairment on an annual basis, against the prospective fair value of the intangible asset. The valuation of intangible assets with an indefinite useful life is reassessed on an annual basis through valuation techniques applicable to the nature of the intangible assets. In assessing whether a write-down is required in the carrying value of a potentially impaired intangible asset, the asset’s carrying value is compared with its recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use. The valuation techniques applicable to the valuation of the abovementioned intangible assets comprise a combination of fair market values, discounted cash flow projections and historic transaction prices. The following key assumptions influence the measurement of the intangible assets recoverable amounts, through utilising the value in use method in order to determine the recoverable amount: • • • • • • • Comparable market value of similar mineral statements; Currency fluctuations and exchange movements; Expected growth rates; Cost of capital related to funding requirements; Applicable discounts rates; Future operating expenditure for extraction and mining of measured mineral resources; and Co-operation of key project partners going forward. Through review of the project specific financial, operational, market and economic indicators applicable to the above intangible assets, impairment indicators were identified which required impairment of the intangible assets and reversal of impairments recognised in respect of selective exploration projects. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 40 40 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 NOTES TO THE ANNUAL FINANCIAL STATEMENTS KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 11. Intangible assets Mbeya Coal to Power Project In January, the Company announced the completion of a key document, the Integrated Bankable Feasibility Study (IBFS) on the project. The highlights included: • • • Total capital requirement for the integrated project reduced 21.1 % from the original integrated prefeasibility study (“IPFS”) figure; Indicative MCPP total revenue over an assumed 25-year life of project (Note: the final life of project will be fixed by the final Power Purchase Agreement (“PPA”)) of approximately US$7.5 to US$8.5 billion; Indicative post tax Equity IRR between 21% and 22%, an increase of 11% on the indicative IPFS post-tax Equity IRR, based on the following conservative debt assumptions: o o o o Debt tenor: 12 years; All in interest rate (post construction): 10%; and DSRA facility: 6 months Post tax Project IRR ranging between 14.7% and 16%; Indicative post-tax payback: Equity Payback Period: 4 to 5 years Debt Payback Period: 11 to 12 years As at year end the Group re-assessed the fair value of intangible assets with an indefinite useful life utilising the resource estimation principles applicable to the Mbeya Coal assets, concluding that there is no impairment as the fair value of these intangible assets exceed the carrying value. Lake Victoria Project With the divestment of its entire interest in Kibo Gold during the current period, the Group has divested interest in the Lake Victoria projects (Imweru & Lubando) which are currently being further developed by Katoro Gold PLC. During the current financial period significant further progress has been made by Katoro Gold PLC in developing the ∗ Imweru project, which can been seen from the following key milestones achieved: ∗ ∗ 31 further holes for a total 3,410 metres drilled; Mining Licence application submitted ; Granted certification from the relevant Tanzanian environmental authority for the terms of reference and scoping report for the Imweru ESIA. As at year end the Group re-assessed the fair value of intangible assets with an indefinite useful life utilising the resource estimation principles applicable to the Lake Victoria assets, concluding that there is no impairment as the fair value of these intangible assets exceed the carrying value. 12. Acquisition of subsidiary The Group successfully concluded its transaction with Opera Investments (“Opera”), whereby Opera acquired Kibo’s Imweru and Lubando gold properties for 61 million Opera shares representing a valuation of £3.66 million. The purchase price comprises cost incurred in relation to development of the Kibo Gold Ltd project. An amount of £864,050 as per interim deal fees working schedule was expensed through profit and loss. Opera was incorporated on 11 November 2014 with an initial share capital of £52,500 and raised £1,200,000 before transaction expenses through a fundraising at a placing price of 10 pence per share in conjunction with its initial admission to the Standard Segment and to trading on the Main Market in April 2015, in order to finance the identification and acquisition of a natural resources company, business, project or asset that it would develop and grow. The acquisition of Opera shares was undertaken by Kibo to focus on the further development of the Mbeya Coal to Power Project and accordingly Kibo diluted its interest in Kibo Gold Limited projects. Opera was renamed Katoro Gold PLC (“Katoro”) and was admitted to AIM on 23 May 2017. Kibo retains an interest of 56.7% in Katoro. IFRS 3: Business Combinations The acquisition of Katoro by Kibo read in accordance with , an entity which does not have processes, input and output cannot be defined as a business. Thus, as Katoro is not a business as defined in accordance with IFRS 3, the acquisition method as prescribed by IFRS 3 would not be applicable. As a result, the acquisition is classified as a disposal without a loss of control transaction in terms of IFRS, as the majority of shareholder of the Kibo Group before and after the acquisition is similar. This results therein that no fair value exercise was performed on the Katoro assets and liabilities acquired; all existing book values were carried over to the Kibo group; no additional goodwill was generated from this transaction and any difference between the value of the shares received by Kibo and the net asset value of Katoro at its acquisition date has been recognised in equity reserves. 41 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 41 Intangible assets consist solely of separately identifiable prospecting assets identified through business combinations, where these separately identifiable intangible assets will be recognised at fair value on acquisition date of said subsidiary. The following reconciliation serves to summarise the composition of intangible prospecting assets as at period end: Reconciliation of Intangible Assets Pinewood Mbeya Coal Project to Power (£) Project (£) Lake Victoria Project (£) Haneti Total (£) Project (£) - 15,896,105 1,700,000 - 17,596,105 Valuation as at 1 January 2016 Impairment of prospecting licences Carrying value as at 1 January 2017 Reversal of impairment of licences Impairment of prospecting licences Carrying value as at 31 December 2017 Reversal of impairment of licences - 15,896,105 1,700,000 17,596,105 - - - - - - - - - - - - - - - - - - - 15,896,105 1,700,000 17,596,105 - - - - Intangible assets are not amortised, due to the indefinite useful life which is attached to the underlying prospecting rights, until such time that active mining operations commence, which will result in the intangible asset being amortised over the useful life of the relevant mining licences. Intangible assets with an indefinite useful life are assessed for impairment on an annual basis, against the prospective fair value of the intangible asset. The valuation of intangible assets with an indefinite useful life is reassessed on an annual basis through valuation techniques applicable to the nature of the intangible assets. In assessing whether a write-down is required in the carrying value of a potentially impaired intangible asset, the asset’s carrying value is compared with its recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use. The valuation techniques applicable to the valuation of the abovementioned intangible assets comprise a combination of fair market values, discounted cash flow projections and historic transaction prices. The following key assumptions influence the measurement of the intangible assets recoverable amounts, through utilising the value in use method in order to determine the recoverable amount: • • • • • • • Comparable market value of similar mineral statements; Currency fluctuations and exchange movements; Expected growth rates; Cost of capital related to funding requirements; Applicable discounts rates; Future operating expenditure for extraction and mining of measured mineral resources; and Co-operation of key project partners going forward. Through review of the project specific financial, operational, market and economic indicators applicable to the above intangible assets, impairment indicators were identified which required impairment of the intangible assets and reversal of impairments recognised in respect of selective exploration projects. 40 KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 The following table provides detail relating to the acquisitions: Property, plant and equipment Current taxation receivable Trade and other receivables Cash and cash equivalents Trade and other payables Net assets acquired Group Group 2017 (£) 2016 (£) - - 863,254 465,408 548,018 (780,644) 457 - - - (8,769) (9,226) Katoro (previously Opera Investments Plc), was a cash shell listed on the Alternative Investment Market (“AIM”) of the LSE, where its objective was to acquire early stage exploration projects, such as the Lake Victoria project. Katoro incurred a net loss of £1,888,363 during the 2017 financial period since acquisition, of which £911,648 related to exploration activities, £206,670 relates to deemed cost of listing and £770,141 relate to administrative costs, including listing and capital raising fees. The purchase price paid by Katoro included settlement of the outstanding loan account amount and related cost incurred on the project. 13 Trade and other receivables . Group 2017 (£) Group 2016 (£) Company 2017 (£) Company 2016 (£) Amounts falling due over one year: Amounts owed by group undertakings Amounts falling due within one year: Other debtors - - 24,402,788 26,998,867 59,046 59,046 50,633 50,633 413 24,403,201 690 26,999,557 The nature of amounts owed by Group undertakings is such that the expected recovery thereof is in excess of one year, and is thus classified as amounts falling due after one year. The carrying value of current trade and other receivables equals their fair value due mainly to the short-term nature of these receivables. Amounts owed by group undertakings represent inter-company loans between the Company and its subsidiaries. They have no fixed repayment terms, bear no interest and are unsecured, resulting in the recognition of the receivable as a non-current asset due to settlement being extended beyond 12 months. The net decrease in amounts owed by group undertakings relates to the settlement of the £1.5million Sanderson borrowings during the prior financial period, through the issue of shares in Mbeya Coal Development Company Limited, a subsidiary of the Company (see Note 21). Trade and other receivables pledged as security None of the above stated trade and other receivables were pledged as security at period end. Credit quality of trade and other receivables that are neither past due nor impaired can be assessed by reference to historical repayment trends of the individual debtors. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 42 42 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 NOTES TO THE ANNUAL FINANCIAL STATEMENTS KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 The following table provides detail relating to the acquisitions: Property, plant and equipment Current taxation receivable Trade and other receivables Cash and cash equivalents Trade and other payables Net assets acquired Group Group 2017 (£) 2016 (£) - - 863,254 465,408 548,018 (780,644) 457 - - - (8,769) (9,226) Katoro (previously Opera Investments Plc), was a cash shell listed on the Alternative Investment Market (“AIM”) of the LSE, where its objective was to acquire early stage exploration projects, such as the Lake Victoria project. Katoro incurred a net loss of £1,888,363 during the 2017 financial period since acquisition, of which £911,648 related to exploration activities, £206,670 relates to deemed cost of listing and £770,141 relate to administrative costs, including listing and capital raising fees. The purchase price paid by Katoro included settlement of the outstanding loan account amount and related cost incurred on the project. Trade and other receivables 13 . Group 2017 (£) Group 2016 (£) Company 2017 (£) Company 2016 (£) Amounts falling due over one year: Amounts owed by group undertakings Amounts falling due within one year: Other debtors - - 24,402,788 26,998,867 59,046 59,046 50,633 50,633 413 690 24,403,201 26,999,557 The nature of amounts owed by Group undertakings is such that the expected recovery thereof is in excess of one year, and is thus classified as amounts falling due after one year. The carrying value of current trade and other receivables equals their fair value due mainly to the short-term nature of these receivables. Amounts owed by group undertakings represent inter-company loans between the Company and its subsidiaries. They have no fixed repayment terms, bear no interest and are unsecured, resulting in the recognition of the receivable as a non-current asset due to settlement being extended beyond 12 months. The net decrease in amounts owed by group undertakings relates to the settlement of the £1.5million Sanderson borrowings during the prior financial period, through the issue of shares in Mbeya Coal Development Company Limited, a subsidiary of the Company (see Note 21). Trade and other receivables pledged as security None of the above stated trade and other receivables were pledged as security at period end. Credit quality of trade and other receivables that are neither past due nor impaired can be assessed by reference to historical repayment trends of the individual debtors. 14. Cash Cash consists of: Short term convertible cash reserves Group (£) Company (£) 2017 2016 2017 2016 766,586 766,586 382,339 382,339 5,690 5,690 22,082 22,082 Cash has not been ceded, or placed as encumbrance toward any liabilities as at year end. 15. Share capital - Group and Company Authorised equity 2017 2016 1,000,000,000 (2016: 1,000,000,000) Ordinary shares of €0.015 each 3,000,000,000 deferred shares of €0.009 each Allotted, issued and fully paid shares €15,000,000 €15,000,000 €42,000,000 €42,000,000 €27,000,000 €27,000,000 (2017: 395,254,364 Ordinary shares of €0.015 each) (2016: 363,976,596 Ordinary shares of €0.015 each) 1,291,394,535 Deferred shares of €0.009 each £4,758,595 - £14,015,670 £9,257,075 - £4,346,890 £13,603,965 £9,257,075 Number of Shares Ordinary Share Capital (£) Deferred Share Capital (£) Share Premium (£) Treasury shares (£) Balance at 31 December 2016 363,976,596 4,346,890 9,257,075 27,318,262 Shares issued during the period Balance at 31 December 2017 31,277,768 395,254,364 411,705 4,758,595 - 9,257,075 1,151,488 28,469,750 - - - All ordinary shares issued have the right to vote, right to receive dividends, a copy of the annual report, and the right to transfer ownership of their shares. The Deferred Shares will not entitle holders to receive notice of, or attend or vote at any general meeting of the Company or to receive a dividend or other distribution or to participate in any return on capital on a winding up other than the nominal amount paid following a substantial distribution to the holders of the Ordinary Shares in the Company. Accordingly, for all practical purposes the Deferred Shares will be valueless, and it is the board’s intention at the appropriate time, to purchase the Deferred Shares at an aggregate consideration of €1. 16. Control reserve The transaction with Opera Investments (refer to note 12) represented a disposal without loss of control. Under IFRS this constitutes a transaction with equity holders and as such is recognised through equity as opposed to recognising goodwill. The control reserve represents the difference between the purchase consideration and the book value of the net assets and liabilities acquired in the transaction with Opera Investments. 42 43 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 43 KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 17. Share based payments reserve The following reconciliation serves to summarise the composition of the share based payment reserve as at period end: Group (£) Opening balance of share based payment reserve Issue of share options and warrants Reclassification of share based payment reserve on expired share options 2017 514,279 2016 514,279 41,807 556,086 - 514,279 - Share options and warrants in the current year relate to 1,208,333 ordinary shares in Katoro Gold Plc Group, issued to directors of Katoro Gold Plc. The fair value of the warrants issued have been determined using the Black-Scholes option pricing model. The fair value at the date of the grant per warrant was £0. 06. Company (£) Opening balance of share based payment reserve Issue of share options and warrants Reclassification of share based payment reserve on expired share options Costs associated with options issued as stated above. 2017 514,279 - - 514,279 2016 514,279 - - 514,279 The Group recognised the following expense related to equity settled share based payment transactions: 2017 (£) 2016 (£) Fair value of share options issued Non-executive Directors emoluments settled Geological expenditure settled* Listing and capital raising fees - - 13,194 921,737 908,543 - - 8,822 1,656,826 1,648,004 * The company issued 277,768 ordinary shares of €0.015 par value each in the capital of the Company to service providers in settlement of invoices for a total amount of £13,194. The shares issued were in respect of invoices for geological and investor relations services to the Company and were issued at a price of 4.75p per Kibo share. The Company recognised the following expense related to equity settled share based payment transactions: 2017 (£) 2016 (£) Fair value of share options issued Listing and capital raising fees Non-executive Directors emoluments settled - 908,543 908,543 - - 1,648,004 1,648,004 - At 31 December 2017 the Company had 14,399,333 options and 10,000,000 warrants outstanding detailed below: Exercisable as at 31 December 2017 Exercise start date Exercise Price Number Granted Date of Grant Expiry date Options 02 Jun 15 02 Jun 15 1 Jun 18 5p 14,399,333 14,399,333 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 44 44 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 NOTES TO THE ANNUAL FINANCIAL STATEMENTS KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 17. Share based payments reserve Warrants 20 Feb 15 Total Contingently Issuable shares 24 Mar 15 23 Mar 18 9p The following reconciliation serves to summarise the composition of the share based payment reserve as at period Reconciliation of the quantity of share options in issue: end: 10,000,000 24,399,333 10,000,000 24,399,333 Opening balance of share based payment reserve Issue of share options and warrants Reclassification of share based payment reserve on expired share options Share options and warrants in the current year relate to 1,208,333 ordinary shares in Katoro Gold Plc Group, issued to directors of Katoro Gold Plc. The fair value of the warrants issued have been determined using the Black-Scholes option pricing model. The fair value at the date of the grant per warrant was £0. 06. Opening balance Issue of share options Expiration of share options Reconciliation of the quantity of warrants in issue: Opening balance of share based payment reserve Issue of share options and warrants Reclassification of share based payment reserve on expired share options Costs associated with options issued as stated above. Opening balance Warrants issued Warrants exercised Warrants lapsed Group Company 2017 2016 2017 2016 14,399,333 14,399,333 14,399,333 14,399,333 - 14,399,333 14,399,333 - - - - 14,399,333 14,399,333 - - - Group Company 2017 10,000,000 2016 10,000,000 2017 10,000,000 2016 10,000,000 - - 10,000,000 - - - 10,000,000 - - - 10,000,000 - - - 10,000,000 - Group (£) 2017 2016 514,279 514,279 41,807 556,086 514,279 - - Company (£) 2017 2016 514,279 514,279 - - - - 514,279 514,279 Weighted average remaining contractual life of warrants is 0.2 years, and options are 0.5 years. The average share price during the year was £0.0557. The weighted average exercise price of the options and warrants outstanding at year end was £0.05 and £0.09 respectively. The fair value of the share-based payment is based upon the Black-Scholes formula, a commonly used option pricing model. The calculation of volatility used in the model is based upon an average of market prices against current market prices of listed companies operating in the mining industry. The 10,000,0000 warrants, with an expiry date of 23 March 2018, exercisable at £0.09 and 14,399,333 options, with an expiry date of 1 June 2018, exercisable at £0.05 outstanding as at year end were issued as incentive to joint-venture partners and employees respectively in order to retain fruitful continued financial relationships with these stakeholders respectively. No fair value was allocated to the 10,000,000 warrants in issue at year end as the Directors considered that no services were received in exchange for the issue of warrants. 18. Translation reserves The foreign exchange reserve relates to the foreign exchange effect of the retranslation of the Group’s overseas subsidiaries on consolidation into the Group’s financial statements, taking into account the financing provided to subsidiary operations is seen as part of the Group’s net investment in subsidiaries. Company Group Opening balance Movement during the period Closing balance of foreign currency translation reserve 2017 (£) 2016 (£) 2017 (£) 2016 (£) (285,491) (384,619) 47,430 52,499 (268,506) 16,985 (285,491) 99,128 14,723 (32,707) 47,430 (5,069) 44 45 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 45 The Group recognised the following expense related to equity settled share based payment transactions: 2017 (£) 2016 (£) Fair value of share options issued Non-executive Directors emoluments settled Geological expenditure settled* Listing and capital raising fees 13,194 921,737 908,543 1,656,826 8,822 1,648,004 * The company issued 277,768 ordinary shares of €0.015 par value each in the capital of the Company to service providers in settlement of invoices for a total amount of £13,194. The shares issued were in respect of invoices for geological and investor relations services to the Company and were issued at a price of 4.75p per Kibo share. The Company recognised the following expense related to equity settled share based payment transactions: 2017 (£) 2016 (£) - - - - - - - - Fair value of share options issued Listing and capital raising fees Non-executive Directors emoluments settled At 31 December 2017 the Company had 14,399,333 options and 10,000,000 warrants outstanding detailed below: Options Date of Grant Exercise start date Expiry date Exercise Price Number Granted 02 Jun 15 02 Jun 15 1 Jun 18 5p 14,399,333 14,399,333 908,543 908,543 1,648,004 1,648,004 Exercisable as at 31 December 2017 KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 19. Non-controlling interest The non-controlling interest carried forward relates to the 2.5% interest held by Sanderson Capital Partners Limited in the Mbeya Coal Development Limited and its subsidiaries with effect from 1 September 2016. Effective on 23 May 2017 the Company concluded the disposal of its Kibo Gold Group of entities to Katoro Gold in exchange for 57.1% equity in Katoro Gold. The transaction did not result in a loss of control. Group Opening balance Disposal of interest in subsidiary without loss of control Acquisition of interest in subsidiary Loss for the year allocated to non-controlling interest Closing balance of non-controlling interest 2017 (£) 2016 (£) (1,435) - (803,421) 235,100 (1,383,388) (813,632) (27,515) - (1,435) 26,080 The summarised financial information for significant subsidiaries in which the non-controlling interest has an influence, namely the Katoro Gold Group as at ended 31 December 2017, is presented below: Katoro plc Group 2017 (£) Statement of Financial position Total assets Statement of Profit and Loss Total liabilities Revenue for the period Statement of Cash Flow Loss for the period Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Trade and other payables 20. 566,658 (175,284) - (1,888,461) (1,230,170) - 1,783,753 Amounts falling due within one year: Group 2017 (£) Group 2016 (£) Company 2017 (£) Company 2016 (£) Trade payables 266,218 266,218 146,380 146,380 86,736 86,736 35,003 35,003 The carrying value of current trade and other payables equals their fair value due mainly to the short term nature of these receivables. 21. Borrowings Amounts falling due within one year: Short term loans Reconciliation of borrowings: Group 2017 (£) Group 2016 (£) Company 2017 (£) Company 2016 (£) 1,210,768 1,210,768 Group 2017 (£) 251,928 251,928 Group 2016 (£) 1,210,768 1,210,768 Company 2017 (£) 251,928 251,928 Company 2016 (£) Opening balance Raised during the year Closing balance Settled through the issue of shares 251,928 1,748,840 1,210,768 (790,000) - 251,928 251,928 - 251,928 1,748,840 1,210,768 (790,000) - 251,928 251,928 - KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2016 46 46 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 NOTES TO THE ANNUAL FINANCIAL STATEMENTS KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 19. Non-controlling interest The non-controlling interest carried forward relates to the 2.5% interest held by Sanderson Capital Partners Limited in the Mbeya Coal Development Limited and its subsidiaries with effect from 1 September 2016. Effective on 23 May 2017 the Company concluded the disposal of its Kibo Gold Group of entities to Katoro Gold in exchange for 57.1% equity in Katoro Gold. The transaction did not result in a loss of control. Opening balance Disposal of interest in subsidiary without loss of control Acquisition of interest in subsidiary Loss for the year allocated to non-controlling interest Closing balance of non-controlling interest The summarised financial information for significant subsidiaries in which the non-controlling interest has an influence, namely the Katoro Gold Group as at ended 31 December 2017, is presented below: Katoro plc Group 2017 (£) Group 2017 (£) 2016 (£) (1,435) - (803,421) (1,383,388) 235,100 (813,632) (27,515) - (1,435) 26,080 566,658 (175,284) - - (1,888,461) (1,230,170) 1,783,753 Statement of Financial position Total assets Statement of Profit and Loss Total liabilities Revenue for the period Statement of Cash Flow Loss for the period Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Trade and other payables 20. Amounts falling due within one year: Group Group 2017 (£) 2016 (£) Company 2017 (£) Company 2016 (£) Trade payables 266,218 266,218 146,380 146,380 86,736 86,736 35,003 35,003 The carrying value of current trade and other payables equals their fair value due mainly to the short term nature of these receivables. Borrowings 21. Amounts falling due within one year: Short term loans Reconciliation of borrowings: Group Group 2017 (£) 2016 (£) Company 2017 (£) Company 2016 (£) 1,210,768 1,210,768 Group 251,928 251,928 Group 2017 (£) 2016 (£) 1,210,768 1,210,768 251,928 251,928 Company 2017 (£) Company 2016 (£) Opening balance Raised during the year Closing balance Settled through the issue of shares 251,928 1,748,840 1,210,768 (790,000) 251,928 251,928 - - 251,928 1,748,840 1,210,768 (790,000) 251,928 251,928 - - The borrowings relate to the unsecured interest free loan facility from Sanderson Capital Partners Limited which was repayable either through the issue of cash or ordinary shares in the Company. On 1 September 2016, the Company renegotiated the settlement terms where Sanderson Capital Partners Limited agreed to convert the full loan amount outstanding (£1.5million) into a 2.5% equity interest in the Mbeya Development Company Limited which is a 100% held subsidiary of the Group, and holds 100% interest in the Mbeya Coal to Power Project. Towards the end of 2016 and during the 2017 financial year, the Group drew down £2,000,768 of the revised facility and settled £790,000 by way of a share issue. A further balance of £565,308 was settled by way of cash and shares (£365,500) issued subsequent to year end – refer post balance sheet events. 22. Provisions Amounts falling due within one year: Group 2017 (£) Group 2016 (£) Company 2017 (£) Company 2016 (£) Potential corporate transaction - - 115,663 115,663 - - 115,663 115,663 Under the terms of the heads of terms agreement with Opera Investments Plc (“Opera”) on 23 September 2016, the Kibo Group agreed to undertake due diligence and incur costs associated with the Katoro transaction. These costs were incurred by Opera during the 2016 financial period, and settled on date of listing by Kibo, decreasing the liability during the current period. 23. Investment in group undertakings Investments at Cost At 1 January 2016 Additions Disposals At 31 December 2016 (£) Additions Provision for impairment Disposals At 31 December 2017 (£) * Subsidiary undertakings (£) 1,700,000 - - 1,700,000 3,710,000 (1,941,776) - 3,468,224 * The above investment in subsidiaries comprises the carrying value of the investments in Kibo Mining (Cyprus) Limited, Sloane Developments Limited and Katoro Gold Plc to the value of £1,700,000, £nil and £1,768,224 respectively. As at year end, the investment in Katoro Gold Plc, originally purchased for £3,710,000, showed indications of impairment, based on the fair market value (£0.02880 per share) at which the shares were being traded on the Alternative Investment Market of the LSE. This resulted in an impairment being recognised through profit and loss against the investment in Katoro Gold Plc amounting to £1,941,776 for the Company. 46 47 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2016 47 KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 At 31 December 2017 the Company had the following undertakings: Subsidiary, associate or Joint Venture Activity Incorporated in Interest held (2017) Interest held (2016) Description Directly held subsidiaries Sloane Developments Limited Subsidiary Holding Company Kibo Mining (Cyprus) Limited Katoro Gold Plc Indirectly held subsidiaries Subsidiary Treasury Function Subsidiary Mineral Exploration United Kingdom Cyprus United Kingdom 100% 100% 100% 57% 100% - Kibo Gold Limited Savannah Mining Limited Reef Miners Limited Kibo Nickel Limited Eagle Exploration Limited Mzuri Energy Limited Mbeya Holdings Limited Mbeya Development Limited Mbeya Mining Company Limited Mbeya Coal Limited Mzuri Power Limited Mbeya Power Tanzania Limited Kibo Mining South Africa (Pty) Ltd Kibo (Tanzania) Limited Kibo MXS Limited Tourlou Limited Mzuri Limited Protocol Mining Limited Jubilee Resources Limited Kibo Jubilee (Cyprus) Limited Kibo Uranium Limited Pinewood Resources Limited Makambako Resources Limited Exploration Exploration Services Subsidiary Holding Company Subsidiary Mineral Exploration Subsidiary Mineral Exploration Subsidiary Holding Company Subsidiary Mineral Exploration Holding Company Subsidiary Holding Company Subsidiary Holding Company Subsidiary Subsidiary Holding Company Subsidiary Mineral Exploration Holding Company Subsidiary Power Generation Subsidiary Treasury Function Subsidiary Treasury Function Subsidiary Holding Company Subsidiary Subsidiary Holding Company Subsidiary Exploration Services Subsidiary Exploration Services Subsidiary Mineral Exploration Subsidiary Holding Company Subsidiary Mineral Exploration Subsidiary Mineral Exploration Subsidiary Mineral Exploration Cyprus Tanzania Tanzania Cyprus Tanzania Canada Cyprus Cyprus Cyprus Tanzania Cyprus Tanzania South Africa Tanzania Cyprus Cyprus Tanzania Tanzania Tanzania Cyprus Cyprus Tanzania Tanzania 57% 57% 57% 100% 100% 100% 97,5% 97,5% 97,5% 100% 100% 97,5% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 97,5% 97,5% 97,5% 100% 100% 97,5% 100% 100% 100% 100% 100% 100% 50% 50% 50% 50% 50% The value of the investments is dependent on the discovery and successful development of evaluation and exploration assets. Should the development of the evaluation and exploration assets prove unsuccessful, the carrying value in the statement of financial position will be written off. In the opinion of the Directors’ the carrying value of the investments is appropriate. Group – 2017 Financial Period The aggregate pre-consolidation capital and reserves and results of the subsidiary undertakings for the last relevant financial period were as follows: Profit/(loss) for the period (£) Net Asset Value/ (Net Liability Value) (£) Reef Miners Limited Jubilee Resources Limited Kibo Cyprus Jubilee Limited Savannah Mining Limited Kibo Gold Limited Kibo Exploration Limited KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2016 48 48 (1,882,194) (1,271,268) (10,438) (938,819) (220,345) (561,939) (959,515) (7,812) (4,035) (119,169) (175,498) (112,686) KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 NOTES TO THE ANNUAL FINANCIAL STATEMENTS KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 At 31 December 2017 the Company had the following undertakings: Subsidiary, associate or Joint Venture Incorporated held held Activity in (2017) (2016) Interest Interest Description Directly held subsidiaries Sloane Developments Limited Subsidiary Holding Company 100% 100% Subsidiary Treasury Function Subsidiary Mineral Exploration 100% 57% 100% - Kibo Mining (Cyprus) Limited Katoro Gold Plc Indirectly held subsidiaries Kibo Gold Limited Savannah Mining Limited Reef Miners Limited Kibo Nickel Limited Eagle Exploration Limited Mzuri Energy Limited Mbeya Holdings Limited Mbeya Development Limited Mbeya Mining Company Limited Mbeya Coal Limited Mzuri Power Limited Mbeya Power Tanzania Limited Kibo Mining South Africa (Pty) Ltd Kibo Exploration (Tanzania) Limited Kibo MXS Limited Tourlou Limited Mzuri Limited Subsidiary Holding Company Subsidiary Mineral Exploration Subsidiary Mineral Exploration Subsidiary Holding Company Subsidiary Mineral Exploration Subsidiary Mineral Exploration Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Holding Company Holding Company Holding Company Holding Company Holding Company Power Generation Treasury Function Treasury Function Subsidiary Subsidiary Holding Company Holding Company Exploration Services Subsidiary Exploration Services Protocol Mining Limited Jubilee Resources Limited Kibo Jubilee (Cyprus) Limited Kibo Uranium Limited Pinewood Resources Limited Makambako Resources Limited Subsidiary Exploration Services Subsidiary Mineral Exploration Subsidiary Holding Company Subsidiary Mineral Exploration Subsidiary Mineral Exploration Subsidiary Mineral Exploration United Kingdom Cyprus United Kingdom Cyprus Tanzania Tanzania Cyprus Tanzania Canada Cyprus Cyprus Cyprus Tanzania Cyprus Tanzania Cyprus Cyprus Tanzania Tanzania Tanzania Cyprus Cyprus Tanzania Tanzania South Africa Tanzania 57% 57% 57% 100% 100% 100% 97,5% 97,5% 97,5% 100% 100% 97,5% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 97,5% 97,5% 97,5% 100% 100% 97,5% 100% 100% 100% 100% 100% 100% 50% 50% 50% 50% 50% The value of the investments is dependent on the discovery and successful development of evaluation and exploration assets. Should the development of the evaluation and exploration assets prove unsuccessful, the carrying value in the statement of financial position will be written off. In the opinion of the Directors’ the carrying value of the investments is appropriate. financial period were as follows: Group – 2017 Financial Period The aggregate pre-consolidation capital and reserves and results of the subsidiary undertakings for the last relevant Net Asset Profit/(loss) for the period (£) Value/ (Net Liability Value) (£) Kibo Mining South Africa Kibo Mining Cyprus Protocol Mining Limited Mzuri Exploration Limited Kibo MXS Limited Tourlou Limited Eagle Gold Limited Kibo Nickel Limited Makambako Limited Pinewood Resources Limited Kibo Uranium Limited Rukwa Holdings Limited Mzuri Energy Limited Rukwa Coal Limited Mzuri Power Limited Rukwa Mining Limited Rukwa Development Limited Sloane Developments Limited Katoro Limited Kibo Mining Plc 9,093 (21,122,347) (9,553) (1,212,094) (5,726) (4,585) (661,019) (10,315) (39,214) (492,549) (10,682) (8,984) (21,341) (320,023) (246,728) 156,029 3,239 (18,407) 2,099,584 26,579,611 (209) 3,539,547 (1,599) (439,805) (2,871) (4,275) 36,677 (2,871) (388) (3,403) (3,255) (2,479) - (111,347) (119,778) (15,256) (181,022) (4,603) (709,008) (3,269,920) * The profit and loss pertaining to newly acquired subsidiary undertakings has been included from the date of acquisition so as to prevent distortion of pre-acquisition profit and loss. Group – 2016 Financial Period Sloane Developments Limited Kibo Mining (Cyprus) Limited Kibo Gold Limited Savannah Mining Limited Reef Mining Limited Kibo Nickel Limited Eagle Exploration Mining Limited Mzuri Energy Limited Mbeya Holdings Limited Mbeya Development Limited Mbeya Mining Company Limited Mbeya Coal Limited Mzuri Power Limited Mbeya Power Tanzania Limited Kibo Mining South Africa Limited Kibo Exploration (Tanzania) Limited Kibo MXS Limited Tourlou Limited Mzuri Exploration Services Limited Protocol Mining Limited* Profit/(loss) for the period (£) Net Asset Value/ (Net Liability Value) (£) (13,804) (25,954,475) (41,065) (904,822) (1,059,829) (7,125) (697,278) (16,016) (6,225) 181,326 165,535 (234,268) (120,186) - 9,030 (498,527) (2,697) (1,337) (865,278) - (10,108) 5,619,460 (34,928) (29,192) (120,000) (2,660) (71,592) (85) (6,527) (3,110) (2,537) 327,056 (112,858) - (1,316) 262,499 (6,671) (2,611) (422,616) - Reef Miners Limited Jubilee Resources Limited Kibo Cyprus Jubilee Limited Savannah Mining Limited Kibo Gold Limited Kibo Exploration Limited 48 (1,882,194) (1,271,268) (959,515) (7,812) (10,438) (4,035) (119,169) (938,819) (220,345) (561,939) (175,498) (112,686) * The profit and loss pertaining to newly acquired subsidiary undertakings has been included from the date of acquisition so as to prevent distortion of pre-acquisition profit and loss. 49 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2016 49 KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 24. Related party transactions Related parties of the Group comprise subsidiaries, joint ventures, significant shareholders, the Board of Directors and related parties in terms of the listing requirements. Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation. Board of Directors/ Key Management Name Relationship (Directors of:) Andreas Lianos Other entities over which directors/key management or their close family have control or significant influence: River Group, Boudica Group, Tsitato Trading Limited, Gattonside Trading Limited and Namaqua Management Limited River Group River Group provide corporate advisory services and is the Company’s Designated Advisor. Boudica Group Kibo Mining Plc is a shareholder of the following companies and as such are considered related parties: Boudica Group provides secretarial services to the Group. Directly held subsidiaries: Indirectly held subsidiaries: Sloane Developments Limited Kibo Mining (Cyprus) Limited Katoro Gold Plc Kibo Gold Limited Kibo Mining South Africa Limited Savannah Mining Limited Reef Mining Limited Kibo Nickel Limited Eagle Exploration Mining Limited Mzuri Energy Limited Rukwa Holdings Limited Rukwa Development Limited Rukwa Mining Company Limited Rukwa Coal Limited Mzuri Power Limited Kibo Exploration (Tanzania) Limited Mbeya Power Tanzania Limited Kibo MXS Limited Mzuri Exploration Services Limited Tourlou Limited Kibo Uranium Limited Pinewood Resources Limited Makambako Resources Limited Jubilee Resources Limited Kibo Jubilee (Cyprus) Limited The transactions during the period between the Company and its subsidiaries included the settlement of expenditure to/from subsidiaries, working capital funding, and settlement of the Company’s liabilities through the issue of equity in subsidiaries. The loans to/ from group companies do not have fixed repayment terms and are unsecured. The following transactions have been entered into with related entities, by way of common directorship, throughout the financial period. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 50 50 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 NOTES TO THE ANNUAL FINANCIAL STATEMENTS KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 River Group was paid £78,294 (2016: £47,009) for designated advisor services, corporate advisor services and corporate financer fees during the year settled through cash. No fees are payable to River Group as at year end. The expenditure was recognised in the Company as part of administrative expenditure. During the year, Namaqua Management Limited or its nominees, was paid £573,438 (2016: £574,685) for the provision of administrative and management services. £48,824 was payable at the year-end (2016: Nil). Furthermore, during the current year, L. Coetzee, N. O’Keeffe and AL. Lianos each received 1,300,000 ordinary shares valued at £65,000 in lieu of services as directors. The Boudica Group was paid £59,358 (2016: £38,552) in cash for corporate services during the current financial period. No fees are payable to Boudica Group at year end. 25. Financial Instruments and Financial Risk Management The Group and Company’s principal financial instruments comprises cash. The main purpose of these financial instruments is to provide finance for the Group and Company’s operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. It is, and has been throughout the 2017 and 2016 financial period, the Group and Company’s policy not to undertake trading in derivatives. The main risks arising from the Group and Company’s financial instruments are foreign currency risk, credit risk, liquidity risk, interest rate risk and capital risk. Management reviews and agrees policies for managing each of these risks which are summarised below. 2016 (£) 2017 (£) Loans and receivables Financial liabilities Loans and receivables Financial liabilities Financial instruments of the Group are: Financial assets at amortised cost Trade and other receivables Cash Financial liabilities at amortised cost 59,046 766,586 - - 50,633 382,339 - - Trade payables Borrowings - 825,632 - 266,218 1,476,986 1,210,768 - 432,972 - 146,380 398,308 251,928 2017 (£) 2016 (£) Loans and receivables Financial liabilities Loans and receivables Financial liabilities Financial instruments of the Company are: Financial assets at amortised cost Trade and other receivables – non current Trade and other receivables – current Cash Financial liabilities at amortised cost 24,402,788 413 5,690 - - - 26,998,867 690 22,082 - - - Trade payables – current Borrowings Foreign currency risk - 24,408,891 - 86,736 1,297,504 1,210,768 - 27,021,639 - 35,003 286,931 251,928 The Group undertakes certain transactions denominated in foreign currencies and exposures to exchange rate fluctuations therefore arise. Exchange rate exposures are managed by continuously reviewing exchange rate movements in the relevant foreign currencies. The exposure to exchange rate fluctuations is limited as the Company’s subsidiaries operate mainly with Sterling, Euros, South African Rand, US Dollar and Tanzanian Shillings. 51 51 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 24. Related party transactions Related parties of the Group comprise subsidiaries, joint ventures, significant shareholders, the Board of Directors and related parties in terms of the listing requirements. Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation. Board of Directors/ Key Management Name Relationship (Directors of:) Andreas Lianos River Group, Boudica Group, Tsitato Trading Limited, Gattonside Trading Limited and Other entities over which directors/key management or their close family have control or significant Namaqua Management Limited influence: River Group River Group provide corporate advisory services and is the Company’s Designated Advisor. Boudica Group Kibo Mining Plc is a shareholder of the following companies and as such are considered related parties: Boudica Group provides secretarial services to the Group. Directly held subsidiaries: Sloane Developments Limited Kibo Mining (Cyprus) Limited Katoro Gold Plc Indirectly held subsidiaries: Kibo Gold Limited Kibo Mining South Africa Limited Savannah Mining Limited Reef Mining Limited Kibo Nickel Limited Eagle Exploration Mining Limited Mzuri Energy Limited Rukwa Holdings Limited Rukwa Development Limited Rukwa Mining Company Limited Rukwa Coal Limited Mzuri Power Limited Kibo Exploration (Tanzania) Limited Mbeya Power Tanzania Limited Kibo MXS Limited Mzuri Exploration Services Limited Tourlou Limited Kibo Uranium Limited Pinewood Resources Limited Makambako Resources Limited Jubilee Resources Limited Kibo Jubilee (Cyprus) Limited The transactions during the period between the Company and its subsidiaries included the settlement of expenditure to/from subsidiaries, working capital funding, and settlement of the Company’s liabilities through the issue of equity in subsidiaries. The loans to/ from group companies do not have fixed repayment terms and are unsecured. The following transactions have been entered into with related entities, by way of common directorship, throughout the financial period. 50 KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 At the period ended 31 December 2017, the Group had no outstanding forward exchange contracts. Exchange rates used for conversion of foreign subsidiaries undertakings were: 2017 2016 ZAR to GBP (Spot) ZAR to GBP (Average) USD to GBP (Spot) USD to GBP (Average) EURO to GBP (Spot) EURO to GBP (Average) CAD to GBP (Spot) CAD to GBP (Average) 0.0599 0.0593 0.7411 0.7755 0.8877 0.8699 0.5903 0.5964 0.0594 0.0506 0.8127 0.7401 0.8563 0.8186 0.6033 0.5587 The executive management of the Group monitor the Group's exposure to the concentration of fair value estimation risk on a monthly basis. Group Sensitivity Analysis If the GBP:EURO/ EURO:USD exchange rate was to increase/decrease by 10%, the effect on foreign currency translation would be £2.2 million (2016: £2.5 million) and Credit risk £0.48 million (2016: £0.42 million) respectively. Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Group. As the Group does not, as yet, have any sales to third parties, this risk is limited. The Group and Company’s financial assets comprise receivables and cash and cash equivalents. The credit risk on cash and cash equivalents is limited because the counterparties are banks with high credit-ratings assigned by international credit rating agencies. The Group and Company’s exposure to credit risk arise from default of its counterparty, with a maximum exposure equal to the carrying amount of cash and cash equivalents in its consolidated statement of financial position. The Group does not have any significant credit risk exposure to any single counterparty or any Group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are connected or related entities. Financial assets exposed to credit risk at period end were as follows: Financial instruments Group (£) Company (£) 2017 2016 2017 2016 Trade & other receivables Cash Liquidity risk management 59,046 50,633 24,403,201 26,999,557 766,586 382,339 5,690 22,082 Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group and Company’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Cash forecasts are regularly produced to identify the liquidity requirements of the Group. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 52 52 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 NOTES TO THE ANNUAL FINANCIAL STATEMENTS KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 At the period ended 31 December 2017, the Group had no outstanding forward exchange contracts. Exchange rates used for conversion of foreign subsidiaries undertakings were: The Group and Company’s financial liabilities as at 31 December 2017 were all payable on demand, other than the Greater than 1 trade payables to other Group undertakings. year Group (£) At 31 December 2017 Less than 1 year 2017 2016 ZAR to GBP (Spot) ZAR to GBP (Average) USD to GBP (Spot) USD to GBP (Average) EURO to GBP (Spot) EURO to GBP (Average) CAD to GBP (Spot) CAD to GBP (Average) 0.0599 0.0593 0.7411 0.7755 0.8877 0.8699 0.5903 0.5964 0.0594 0.0506 0.8127 0.7401 0.8563 0.8186 0.6033 0.5587 The executive management of the Group monitor the Group's exposure to the concentration of fair value estimation risk on a monthly basis. Group Sensitivity Analysis If the GBP:EURO/ EURO:USD exchange rate was to increase/decrease by 10%, the effect on foreign currency translation would be £2.2 million (2016: £2.5 million) and Credit risk £0.48 million (2016: £0.42 million) respectively. Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Group. As the Group does not, as yet, have any sales to third parties, this risk is limited. The Group and Company’s financial assets comprise receivables and cash and cash equivalents. The credit risk on cash and cash equivalents is limited because the counterparties are banks with high credit-ratings assigned by international credit rating agencies. The Group and Company’s exposure to credit risk arise from default of its counterparty, with a maximum exposure equal to the carrying amount of cash and cash equivalents in its consolidated statement of financial position. The Group does not have any significant credit risk exposure to any single counterparty or any Group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are connected or related entities. Financial assets exposed to credit risk at period end were as follows: Financial instruments Group (£) Company (£) 2017 2016 2017 2016 Trade & other receivables Cash Liquidity risk management 59,046 50,633 24,403,201 26,999,557 766,586 382,339 5,690 22,082 Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group and Company’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Cash forecasts are regularly produced to identify the liquidity requirements of the Group. Trade and other payables Borrowings At 31 December 2016 Trade and other payables Borrowings Company (£) At 31 December 2017 Trade and other payables Borrowings At 31 December 2016 Trade and other payables Borrowings Interest rate risk - - - - - - - - 266,218 1,210,768 146,380 251,928 86,736 1,210,768 35,003 251,928 The Group and Company’s exposure to the risk of changes in market interest rates relates primarily to the Group and Company’s holdings of cash and short term deposits. It is the Group and Company’s policy as part of its management of the budgetary process to place surplus funds on short term deposit in order to maximise interest earned. Group Sensitivity Analysis: Currently no significant impact exists due to possible interest rate changes on the Company’s interest bearing instruments. Capital risk management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust its capital structure, the Group may adjust or issue new shares or raise debt. No changes were made in the objectives, policies or processes during the period ended 31 December 2017. The capital structure of the Group consists of equity attributable to equity holders of the parent, comprising issued capital, reserves and retained losses as disclosed in the consolidated statement of changes in equity. Fair values The carrying amount of the Group and Company’s financial assets and financial liabilities recognised at amortised cost in the financial statements approximate their fair value. Hedging At 31 December 2017, the Group had no outstanding contracts designated as hedges. 52 53 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 53 KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 26. Events after the reporting period Mbeya Coal to Power Project The Group made considerable progress in the Mbeya Coal to Power Project by signing a Memorandum of Understanding (“MOU”) with the Tanzania Electric Supply Company (“TANESCO”), on 14 February 2018. This MOU is the precursor to the finalization of the Power Purchase Agreement (“PPA”) for the 300MW mine – mouth power station to be constructed in south-western Tanzania. Although the PPA has not been signed at the date of issue of the Annual Financial Statements, the Tanzanian Government’s recent pledge to support the private sector is favorable to the Group and evidences national government’s commitment to all projects. Strategies to complete the funding arrangements for this flagship project are ongoing. Botswana Power Project Acquisition On 3 April 2018, the Group completed the acquisition of an 85% interest in the Mabesekwa Coal Independent Power Project, located in Botswana. This acquisition is in line with the Group’s strategy of positioning itself as a strategic regional electricity supplier in Southern Africa and creates many synergies with the MCPP in Tanzania. As a result of the acquisition, 153,710,030 ordinary shares in Kibo were issued to Sechaba Natural Resources Limited (“Sechaba”). Sechaba retained a 15% interest in the Mabesekwa Coal Independent Power Project and gained a seat on Kibo’s board of directors. Initial accounting for the business combination is incomplete at the time the financial statements are authorised for issue, as management is finalising outstanding areas with regard to the acquisition. Share placements Subsequent to year end, the company has raised the following placements: • £750,000 in the placement of 17,647,060 ordinary Kibo shares at 4,25p per share; £1,500,000 in the placement of 28,571,428 ordinary Kibo shares at 5.25p per share; • • 8,370,716 ordinary shares in the company were issued, at a price of 5p per share, to Sanderson Capital Partners Limited (“Sanderson”) as a partial settlement on the balance of funds drawn down under the forward payment facility between the Company and Sanderson. The shares issued are in respect of a repayment amount of US$568,712 (£565,308). Benga Power Joint Venture The Company has signed a Joint Venture Agreement (the ‘Benga Power Joint Venture’ or ‘JV’) with Mozambique energy company Termoeléctrica de Benga S.A. (‘Termoeléctrica’) to participate in the further assessment and potential development of the Benga Independent Power Project (‘BIPP’), including the right to construct and operate a 150- 300MW coal fired power station. Kibo and Termoeléctrica shall hold initial Participation Interests in the unincorporated joint venture of 65% and 35% respectively. In order to maintain this 65% interest, Kibo must fund a maximum of £1 million towards the completion of a Definitive Feasibility Study for the BIPP. 27. Going concern The Company and Group’s ability to continue as a going concern is dependent on the sourcing of additional funding by the Directors for the foreseeable future. The future of the Company and the Group is dependent on the successful future outcome of its short and medium term ability to raise new equity funding and the successful development of its exploration interests and of the availability of further funding to bring these interests to production. The Directors consider that in preparing the financial statements they have taken into account all information that could reasonably be expected to be available. Consequently, they consider that it is appropriate to prepare the financial statements on the going concern basis. The capital-raising subsequent to appointing the new Joint Brokers during March and April 2018 has provided further cash resources in order to ensure prospecting activities are continued as planned without interruption. The prospective conclusion of the Power Purchase Agreement with the Tanzania Electric Supply Company will provide the Group with access to a currently under-served market. This project is considered the Company’s flag-ship project and will place the Group in a favourable position to request additional funding from financers whom have supported the Group historically due to the potential for return on their investments. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 54 54 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 NOTES TO THE ANNUAL FINANCIAL STATEMENTS KIBO MINING PLC NOTES TO THE ANNUAL FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 The directors are also following an active approach to continuously reduce administrative costs in order to alleviate the pressure on cash flow. Furthermore, while the conclusion of the Power Purchase Agreement with the Tanzania Electric Supply Company is being finalised, the Group continues to minimize exploration activities in order to prioritise the MCPP. The Directors have reviewed budgets, projected cash flows and other relevant information, and on the basis of this review, are confident that the Company and the Group will have adequate financial resources to continue in operational existence for the foreseeable future. Commitments and Contingencies 28. The Group does not have identifiable material contingencies or commitments as at the reporting date. Any contingent rental is expensed in the period in which it is incurred. 55 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 55 26. Events after the reporting period Mbeya Coal to Power Project The Group made considerable progress in the Mbeya Coal to Power Project by signing a Memorandum of Understanding (“MOU”) with the Tanzania Electric Supply Company (“TANESCO”), on 14 February 2018. This MOU is the precursor to the finalization of the Power Purchase Agreement (“PPA”) for the 300MW mine – mouth power station to be constructed in south-western Tanzania. Although the PPA has not been signed at the date of issue of the Annual Financial Statements, the Tanzanian Government’s recent pledge to support the private sector is favorable to the Group and evidences national government’s commitment to all projects. Strategies to complete the funding arrangements for this flagship project are ongoing. Botswana Power Project Acquisition On 3 April 2018, the Group completed the acquisition of an 85% interest in the Mabesekwa Coal Independent Power Project, located in Botswana. This acquisition is in line with the Group’s strategy of positioning itself as a strategic regional electricity supplier in Southern Africa and creates many synergies with the MCPP in Tanzania. As a result of the acquisition, 153,710,030 ordinary shares in Kibo were issued to Sechaba Natural Resources Limited (“Sechaba”). Sechaba retained a 15% interest in the Mabesekwa Coal Independent Power Project and gained a seat on Kibo’s board of directors. Initial accounting for the business combination is incomplete at the time the financial statements are authorised for issue, as management is finalising outstanding areas with regard to the acquisition. Share placements Subsequent to year end, the company has raised the following placements: £750,000 in the placement of 17,647,060 ordinary Kibo shares at 4,25p per share; £1,500,000 in the placement of 28,571,428 ordinary Kibo shares at 5.25p per share; • • • 8,370,716 ordinary shares in the company were issued, at a price of 5p per share, to Sanderson Capital Partners Limited (“Sanderson”) as a partial settlement on the balance of funds drawn down under the forward payment facility between the Company and Sanderson. The shares issued are in respect of a repayment amount of US$568,712 (£565,308). Benga Power Joint Venture The Company has signed a Joint Venture Agreement (the ‘Benga Power Joint Venture’ or ‘JV’) with Mozambique energy company Termoeléctrica de Benga S.A. (‘Termoeléctrica’) to participate in the further assessment and potential development of the Benga Independent Power Project (‘BIPP’), including the right to construct and operate a 150- 300MW coal fired power station. Kibo and Termoeléctrica shall hold initial Participation Interests in the unincorporated joint venture of 65% and 35% respectively. In order to maintain this 65% interest, Kibo must fund a maximum of £1 million towards the completion of a Definitive Feasibility Study for the BIPP. Going concern 27. The Company and Group’s ability to continue as a going concern is dependent on the sourcing of additional funding by the Directors for the foreseeable future. The future of the Company and the Group is dependent on the successful future outcome of its short and medium term ability to raise new equity funding and the successful development of its exploration interests and of the availability of further funding to bring these interests to production. The Directors consider that in preparing the financial statements they have taken into account all information that could reasonably be expected to be available. Consequently, they consider that it is appropriate to prepare the financial statements on the going concern basis. The capital-raising subsequent to appointing the new Joint Brokers during March and April 2018 has provided further cash resources in order to ensure prospecting activities are continued as planned without interruption. The prospective conclusion of the Power Purchase Agreement with the Tanzania Electric Supply Company will provide the Group with access to a currently under-served market. This project is considered the Company’s flag-ship project and will place the Group in a favourable position to request additional funding from financers whom have supported the Group historically due to the potential for return on their investments. 54 KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 ANNEXURE 1 - HEADLINE LOSS PER SHARE Accounting policy Headline earnings per share (HEPS) is calculated using the weighted average number of ordinary shares in issue during the period and is based on the earnings attributable to ordinary shareholders, after excluding those items as required by Circular 2/2016 issued by the South African Institute of Chartered Accountants (SAICA). Reconciliation of Headline earnings per share Headline loss per share Headline loss per share comprises the following: Reconciliation of headline loss per share: Loss for the period attributable to normal shareholders Adjustments Deemed cost of listing Headline loss for the period attributable to normal shareholders Headline loss per ordinary share 31 December 2017 (£) (3,712,707) 31 December 2016 (£) (3,611,496) 206,680 (3,506,027) - (3,611,496) NOTICE is hereby given that the Annual General Meeting of the Company with be held at 10 a.m. on the 30th July 2018 at the Conrad Hotel, Earlsfort Terrace, St Stephen’s Green, Dublin 2, Ireland for the purpose of considering, and if thought fit, passing the following resolutions of which resolutions numbered 1,2,3,4,5 and 6 will be proposed as ordinary resolutions and resolutions numbered 7,8 and 9 will be proposed as special resolutions: (0.010) (0.010) Ordinary Business In order to accurately reflect the weighted average number of ordinary shares for the purposes of basic earnings, dilutive earnings and headline earnings per share as at year end, the weighted average number of ordinary shares was adjusted retrospectively. Company number 451931 Kibo Mining Public Limited Company (“Kibo” or “the Company”) NOTICE OF ANNUAL GENERAL MEETING To receive, consider and adopt the financial statements for the year ended 31 December 2017 together with the Directors and Auditors Reports thereon. To re-elect Mr Wenzel Kerremans as a Director of the Company who by in accordance Company. To appoint Crowe Clarke Whitehill LLP as auditors of the Company. Company. Auditors. 1 2 3 4 5 6 Special business The Directors be and are hereby generally and of the Companies Act 2014 (“2014 Act”), in all powers of the Company to allot relevant authorised pursuant to 1021 for all such (within the meaning of to exercise 1021 of the up to a 2014 Act) provided that such power shall be limited to the allotment of relevant maximum aggregate nominal value equal to the nominal value of the authorised but unissued ordinary share capital of the Company from to The authority hereby conferred shall expire on the date of the next annual general of the Company held the date of passing of this unless previously revoked, renewed or varied by the Company in General save that the Company may before such expiry date make an offer or agreement which would or might require relevant to be such authority has expired and the Directors may allot relevant in pursuance of such offer or agreement as if the authority hereby conferred had not expired. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 56 56 Company number 451931 Kibo Mining Public Limited Company (“Kibo” or “the Company”) NOTICE OF ANNUAL GENERAL MEETING Headline loss for the period attributable to normal shareholders (0.010) (0.010) Ordinary Business 31 December 31 December 2017 (£) 2016 (£) (3,712,707) (3,611,496) 206,680 - (3,506,027) (3,611,496) NOTICE is hereby given that the Annual General Meeting of the Company with be held at 10 a.m. on the 30th July 2018 at the Conrad Hotel, Earlsfort Terrace, St Stephen’s Green, Dublin 2, Ireland for the purpose of considering, and if thought fit, passing the following resolutions of which resolutions numbered 1,2,3,4,5 and 6 will be proposed as ordinary resolutions and resolutions numbered 7,8 and 9 will be proposed as special resolutions: KIBO MINING PLC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 ANNEXURE 1 - HEADLINE LOSS PER SHARE Accounting policy Headline earnings per share (HEPS) is calculated using the weighted average number of ordinary shares in issue during the period and is based on the earnings attributable to ordinary shareholders, after excluding those items as required by Circular 2/2016 issued by the South African Institute of Chartered Accountants (SAICA). Reconciliation of Headline earnings per share Headline loss per share Headline loss per share comprises the following: Reconciliation of headline loss per share: Loss for the period attributable to normal shareholders Adjustments Deemed cost of listing Headline loss per ordinary share In order to accurately reflect the weighted average number of ordinary shares for the purposes of basic earnings, dilutive earnings and headline earnings per share as at year end, the weighted average number of ordinary shares was adjusted retrospectively. To receive, consider and adopt the financial statements for the year ended 31 December 2017 together with the Directors and Auditors Reports thereon. Company. 1 2 3 4 5 To re-elect Mr Wenzel Kerremans as a Director of the Company who accordance Company. by in To appoint Crowe Clarke Whitehill LLP as auditors of the Company. Auditors. Special business 6 for all authorised pursuant to such 1021 The Directors be and are hereby generally and of the Companies Act 2014 (“2014 Act”), in to exercise 1021 of the all powers of the Company to allot relevant 2014 Act) provided that such power shall be limited to the allotment of relevant up to a maximum aggregate nominal value equal to the nominal value of the authorised but unissued The authority hereby conferred shall ordinary share capital of the Company from expire on the date of the next annual general the date of unless previously revoked, renewed or varied by the Company in General passing of this save that the Company may before such expiry date make an offer or agreement which such authority has expired and the in pursuance of such offer or agreement as if the authority (within the meaning of of the Company held to be to would or might require relevant Directors may allot relevant hereby conferred had not expired. 56 XVII KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 KIBO MINING PLC COMPANY STATEMENT OF FINANCIAL POSITION ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 Company All figures are stated in Sterling Non-Current Assets Special Resolution 31 December 2017 Audited £ 31 December 2016 Audited £ 1,700,000 26,998,867 3,468,224 24,402,788 7 Investments in group undertakings Trade and other receivables Total Non- current assets Current Assets Trade and other receivables Cash Total Current assets Total Assets Equity and Liabilities Equity 23 13 28,698,867 27,871,012 Subject to the passing of Resolution 6 above that the Directors be and are hereby empowered pursuant to Section 1023 of the Companies Act 2014 (“2014 Act”), in substitution for all existing such authorities, to allot equity securities (within the meaning of Section 1023 of the 2014 Act) for cash pursuant to the authority conferred by resolution number 6 above as if Section 1022(1) of the 2014 Act, did not apply to any such allotment provided that this power shall be limited to the allotment of equity securities including, without limitation, any shares purchased by the Company pursuant to the provisions of the 2014 Act and held as treasury shares, up to a maximum aggregate nominal value equal to the nominal value of the authorised but unissued ordinary share capital of the Company from time to time. The authority hereby conferred shall expire at the conclusion of the next annual general meeting of the Company held after the date of passing of this resolution, save that the Company may before such expiry, make an offer or agreement which would or might require relevant securities to be allotted after such authority has expired and the Directors may allot relevant securities in pursuance of such offer or agreement notwithstanding that the power hereby conferred had not expired. The authority hereby conferred may be renewed, revoked or varied by special resolution of the Company. 690 22,082 413 5,690 27,877,115 28,721,639 22,772 13 14 6,103 Called up share capital Share premium Special Resolution Share based payment reserve Translation reserves Total Equity Retained deficit 8 Liabilities Current Liabilities Special Resolution Trade and other payables Borrowings Provisions Total liabilities Total Equity and Liabilities 9 (a) (b) 14,015,670 28,469,750 514,279 14,723 (16,434,811) 26,579,611 13,603,965 27,318,262 514,279 47,430 (13,164,891) 29,271,864 15 15 17 18 20 21 22 THAT, subject to the approval of the Registrar of Companies, the name of the Company shall be changed from “Kibo Mining Public Limited Company” to “Kibo Energy Public Limited Company”. THAT, subject to the passing of Resolution 8 above, 86,736 1,210,768 - 35,003 251,928 115,663 the heading of the Memorandum of Association of the Company and clause 1 thereof be and is hereby amended by the deletion of the words “Kibo Mining Public Limited Company” and the insertion in their place of the words “Kibo Energy Public Limited Company”; and 402,594 28,721,639 1,297,504 27,877,115 The accompanying notes on pages 34 - 55 form integral part of these financial statements. the Articles of Association of the Company be and are hereby amended by the deletion of the words “Kibo Mining Public Limited Company” from the heading and Regulation 1 thereof and the insertion in their place of the words “Kibo Energy Public Limited Company”. The financial statements were approved by the Board of Directors on 12 June 2018 and signed on its behalf by: On behalf of the Board By Order of the Board Christian Schaffalitzky ________________________ Noel O’Keeffe Noel O’Keeffe ________________________ Director and Company Secretary Dated: 25th June 2018 Registered Office: 17 Pembroke Street Upper Dublin 2 Ireland 19 KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 XVIII Notes: a. Any shareholder of the Company entitled to attend and vote may appoint another person (whether a member or not) as his/her proxy to attend, speak and vote on his/her behalf. For this purpose, a form of proxy is enclosed with this Notice, an individual copy of which has also been mailed to each shareholder together with an attendance card for admittance to the meeting. A proxy need not be a shareholder of the Company. Lodgement of the form of proxy will not prevent the shareholder from attending and voting at the meeting. Only shareholders, proxies and authorised representatives of corporations, which are shareholders, are entitled to attend the meeting. To be valid, the form of proxy and, if relevant, the power of attorney under which it is signed, or a certi�ied copy of that power of attorney, must be received by the Company’s share registrar, Link Registrars Limited, 2 Grand Canal Square, Dublin 2, D02 A342 not less than 48 hours prior to the time appointed for the meeting. All South African shareholders must send their proxies to the transfer secretaries, Link Market Services South Africa (Pty) Ltd, 13th Floor, 19 Ameshoff Street,Braamfontein (PO Box 4844, Johannesburg, 2000) or via email to meetfax@linkmarketservices.co.za not less than 48 hours prior to the time appointed for the meeting. In the case of joint holders, the vote of the senior holder who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of the other joint holder(s) and for this purpose seniority will be determined by the order in which the names stand in the register of members of the Company in respect of the relevant joint holding. f. The Company, pursuant to Section 1095 of the Companies Act, 2014 and regulation 14 of the Companies Act, 1990 (Uncerti�icated Securities) Regulations 1996 (as amended) speci�ies that only those shareholders registered in the Register of Members of the Company (the “Register”) at the close of business on the day which is two days before the date of the meeting, (or in the case of an adjournment at the close of business on the day which is two days prior to the adjourned meeting), shall be entitled to attend and vote at the meeting or any adjournment thereof in respect only of the number of shares registered in their name at that time. Changes to entries in the Register after that time will be disregarded in determining the rights of any person to attend and/or vote at the meeting. Biographical details for the Directors standing for re-election at the Meeting are set out in the Financial Statements. Each of the Directors has been subject to the evaluation process recommended by the King Corporate Governance Code. On this basis, the Chairman and Board are pleased to recommend the re-election of those Directors. Copies of all documentation tabled before the Meeting are available on the Company’s website. Should you not receive a Form of Proxy, or should you wish to be sent copies of these documents, you may request this by telephoning the Company’s registrar (on + 353 1 553 0050) or by writing to the Company Secretary at the address set out above. b. c. d. e. g. h.  Special Resolution 7 Subject to the passing of Resolution 6 above that the Directors be and are hereby empowered pursuant to Section 1023 of the Companies Act 2014 (“2014 Act”), in substitution for all existing such authorities, to allot equity securities (within the meaning of Section 1023 of the 2014 Act) for cash pursuant to the authority conferred by resolution number 6 above as if Section 1022(1) of the 2014 Act, did not apply to any such allotment provided that this power shall be limited to the allotment of equity securities including, without limitation, any shares purchased by the Company pursuant to the provisions of the 2014 Act and held as treasury shares, up to a maximum aggregate nominal value equal to the nominal value of the authorised but unissued ordinary share capital of the Company from time to time. The authority hereby conferred shall expire at the conclusion of the next annual general meeting of the Company held after the date of passing of this resolution, save that the Company may before such expiry, make an offer or agreement which would or might require relevant securities to be allotted after such authority has expired and the Directors may allot relevant securities in pursuance of such offer or agreement notwithstanding that the power hereby conferred had not expired. The authority hereby conferred may be renewed, revoked or varied by special resolution of the Company. Special Resolution 8 THAT, subject to the approval of the Registrar of Companies, the name of the Company shall be changed from “Kibo Mining Public Limited Company” to “Kibo Energy Public Limited Company”. Special Resolution 9 THAT, subject to the passing of Resolution 8 above, (a) the heading of the Memorandum of Association of the Company and clause 1 thereof be and is hereby amended by the deletion of the words “Kibo Mining Public Limited Company” and the insertion in their place of the words “Kibo Energy Public Limited Company”; and (b) the Articles of Association of the Company be and are hereby amended by the deletion of the words “Kibo Mining Public Limited Company” from the heading and Regulation 1 thereof and the insertion in their place of the words “Kibo Energy Public Limited Company”. By Order of the Board Noel O’Keeffe Director and Company Secretary Dated: 25th June 2018 Registered Office: 17 Pembroke Street Upper Dublin 2 Ireland Notes: a. b. c. d. e. f. g. h. Any shareholder of the Company entitled to attend and vote may appoint another person (whether a member or not) as his/her proxy to attend, speak and vote on his/her behalf. For this purpose, a form of proxy is enclosed with this Notice, an individual copy of which has also been mailed to each shareholder together with an attendance card for admittance to the meeting. A proxy need not be a shareholder of the Company. Lodgement of the form of proxy will not prevent the shareholder from attending and voting at the meeting. Only shareholders, proxies and authorised representatives of corporations, which are shareholders, are entitled to attend the meeting. To be valid, the form of proxy and, if relevant, the power of attorney under which it is signed, or a certi�ied copy of that power of attorney, must be received by the Company’s share registrar, Link Registrars Limited, 2 Grand Canal Square, Dublin 2, D02 A342 not less than 48 hours prior to the time appointed for the meeting. All South African shareholders must send their proxies to the transfer secretaries, Link Market Services South Africa (Pty) Ltd, 13th Floor, 19 Ameshoff Street,Braamfontein (PO Box 4844, Johannesburg, 2000) or via email to meetfax@linkmarketservices.co.za not less than 48 hours prior to the time appointed for the meeting. In the case of joint holders, the vote of the senior holder who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of the other joint holder(s) and for this purpose seniority will be determined by the order in which the names stand in the register of members of the Company in respect of the relevant joint holding. The Company, pursuant to Section 1095 of the Companies Act, 2014 and regulation 14 of the Companies Act, 1990 (Uncerti�icated Securities) Regulations 1996 (as amended) speci�ies that only those shareholders registered in the Register of Members of the Company (the “Register”) at the close of business on the day which is two days before the date of the meeting, (or in the case of an adjournment at the close of business on the day which is two days prior to the adjourned meeting), shall be entitled to attend and vote at the meeting or any adjournment thereof in respect only of the number of shares registered in their name at that time. Changes to entries in the Register after that time will be disregarded in determining the rights of any person to attend and/or vote at the meeting. Biographical details for the Directors standing for re-election at the Meeting are set out in the Financial Statements. Each of the Directors has been subject to the evaluation process recommended by the King Corporate Governance Code. On this basis, the Chairman and Board are pleased to recommend the re-election of those Directors. Copies of all documentation tabled before the Meeting are available on the Company’s website. Should you not receive a Form of Proxy, or should you wish to be sent copies of these documents, you may request this by telephoning the Company’s registrar (on + 353 1 553 0050) or by writing to the Company Secretary at the address set out above. XIX KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 KIBO MINING PUBLIC LIMITED COMPANY Notes: (“Kibo” or the “Company”) FORM OF PROXY I/We (See Note A below) ______________________________________of ____________________________ being a shareholder of the Company, hereby appoint (See Note B below): (b) _____________________________ of _______________________________________ as my/our proxy to th July 2018 at 10 a.m. in the Conrad Hotel, Earlsfort Terrace, St Stephen’s Green, Dublin 2, Ireland and at any adjournment thereof. Please indicate with an ‘‘X’’ in the space below how you wish your votes to be cast in respect of each of the For Against Vote Withheld For Against Vote Withheld To receive, consider and adopt the financial statements for the year ended 31 December 2017 together with the Directors and Auditors Reports thereon To re-elect Mr Tinus Maree as a Director To re-elect Mr Wenzel Kerremans as a Director To appoint Crowe Clarke Whitehill LLP as auditors That the Directors be and are hereby generally and That the Directors be and are hereby empowered pursuant to Subject to the approval of the Registrar of Companies, to change the name of the Company to Kibo Energy Public Limited Company 1 2 3 4 5 6 7 8 9 Dated this _______ day of _________ 2018 ___________________________ KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 XX ✃ (A) A shareholder must insert his, her or its full name and registered address in type or block letters. In the case of joint accounts, the names of all holders must be stated. (B) If you desire to appoint a proxy other than the Chairman of the Meeting, please insert his or her name and address in the space provided and delete the words “the Chairman of the Meeting or”. (C) The proxy form must: (i) (ii) attorney; and shareholder. in the case of an individual shareholder be signed by the shareholder or his or her in the case of a corporate shareholder be given either under its common seal or signed on its behalf by an attorney or by a duly authorized officer of the corporate (D) In the case of joint holders, the vote of the senior holder who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding. (E) To be valid, the form of proxy and, if relevant, the power of attorney under which it is signed, or a certified copy of that power of attorney, must be received by the Company’s share registrar, Link Registrars Ltd, 2 Grand Canal Square, Dublin 2 at not less than 48 hours prior to the time appointed for the meeting. South African shareholders must send their proxies to the transfer secretaries, Link Market Services South Africa (Pty) Ltd, 13th Floor, 19 Ameshoff Street, Braamfontein (PO Box 4844, Johannesburg, 2000) or via email to meetfax@linkmarketservices.co.za not less than 48 hours prior to the time appointed for the meeting (refer to notes to the Form of Proxy for South African Shareholder’s below). represent his/her appointer. Meeting. (F) A proxy need not be a shareholder of the Company but must attend the Meeting in person to (G) The return of a proxy form will not preclude any shareholder from attending and voting at the (H) The “Vote Withheld” option is provided to enable you to abstain on any particular resolution. It should be noted that a “Vote Withheld” is not a vote in law and will not be counted in the calculation of the proportion of the votes ‘For’ and ‘Against’ a resolution. (I) Pursuant to Section 1095 of the Companies Act, 2014 and regulation 14 of the Companies Act, 1990 (Uncertificated Securities) Regulations 1996 entitlement to attend and vote at the meeting and the number of votes which may be cast thereat will be determined by reference to the Register of Members of the Company at close of business on the day which is two days before the date of the meeting (or in the case of an adjournment as at close of business on the day which is two days before the date of the adjourned meeting).Changes to entries on the Register of Members after that time shall be disregarded in determining the rights of any person to attend and vote at the meeting. (J) Contingent on Resolution 8 being passed at the Meeting, no new share certificates will be sent to shareholders who currently hold shares in certificated form in the name of Kibo Mining Public Limited company. Accordingly, existing share certificates will remain valid, and will only be replaced by share certificates in the name of Kibo Energy Public Limited Company when the old share certificates are surrendered for cancellation following their transfer, transmission or other disposal. KIBO MINING PUBLIC LIMITED COMPANY (“Kibo” or the “Company”) FORM OF PROXY I/We (See Note A below) ______________________________________of ____________________________ being a shareholder of the Company, hereby appoint (See Note B below): (b) _____________________________ of _______________________________________ as my/our proxy to th July 2018 at 10 a.m. in the Conrad Hotel, Earlsfort Terrace, St Stephen’s Green, Dublin 2, Ireland and at any adjournment thereof. Please indicate with an ‘‘X’’ in the space below how you wish your votes to be cast in respect of each of the For Against Vote Withheld For Against Vote Withheld To receive, consider and adopt the financial statements for the year ended 31 December 2017 together with the Directors and Auditors Reports thereon To re-elect Mr Tinus Maree as a Director To re-elect Mr Wenzel Kerremans as a Director To appoint Crowe Clarke Whitehill LLP as auditors That the Directors be and are hereby generally and That the Directors be and are hereby empowered pursuant to Subject to the approval of the Registrar of Companies, to change the name of the Company to Kibo Energy Public Limited Company 1 2 3 4 5 6 7 8 9 Dated this _______ day of _________ 2018 ___________________________ Notes: (A) (B) A shareholder must insert his, her or its full name and registered address in type or block letters. In the case of joint accounts, the names of all holders must be stated. If you desire to appoint a proxy other than the Chairman of the Meeting, please insert his or her name and address in the space provided and delete the words “the Chairman of the Meeting or”. (C) The proxy form must: (i) (ii) in the case of an individual shareholder be signed by the shareholder or his or her attorney; and in the case of a corporate shareholder be given either under its common seal or signed on its behalf by an attorney or by a duly authorized officer of the corporate shareholder. (D) (E) (F) (G) (H) (I) (J) In the case of joint holders, the vote of the senior holder who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding. To be valid, the form of proxy and, if relevant, the power of attorney under which it is signed, or a certified copy of that power of attorney, must be received by the Company’s share registrar, Link Registrars Ltd, 2 Grand Canal Square, Dublin 2 at not less than 48 hours prior to the time appointed for the meeting. South African shareholders must send their proxies to the transfer secretaries, Link Market Services South Africa (Pty) Ltd, 13th Floor, 19 Ameshoff Street, Braamfontein (PO Box 4844, Johannesburg, 2000) or via email to meetfax@linkmarketservices.co.za not less than 48 hours prior to the time appointed for the meeting (refer to notes to the Form of Proxy for South African Shareholder’s below). A proxy need not be a shareholder of the Company but must attend the Meeting in person to represent his/her appointer. The return of a proxy form will not preclude any shareholder from attending and voting at the Meeting. The “Vote Withheld” option is provided to enable you to abstain on any particular resolution. It should be noted that a “Vote Withheld” is not a vote in law and will not be counted in the calculation of the proportion of the votes ‘For’ and ‘Against’ a resolution. Pursuant to Section 1095 of the Companies Act, 2014 and regulation 14 of the Companies Act, 1990 (Uncertificated Securities) Regulations 1996 entitlement to attend and vote at the meeting and the number of votes which may be cast thereat will be determined by reference to the Register of Members of the Company at close of business on the day which is two days before the date of the meeting (or in the case of an adjournment as at close of business on the day which is two days before the date of the adjourned meeting).Changes to entries on the Register of Members after that time shall be disregarded in determining the rights of any person to attend and vote at the meeting. Contingent on Resolution 8 being passed at the Meeting, no new share certificates will be sent to shareholders who currently hold shares in certificated form in the name of Kibo Mining Public Limited company. Accordingly, existing share certificates will remain valid, and will only be replaced by share certificates in the name of Kibo Energy Public Limited Company when the old share certificates are surrendered for cancellation following their transfer, transmission or other disposal. XXI KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 11. Dematerialised shareholders, other than by own name registration, must NOT complete this form of proxy and must provide their CSDP or broker of their voting instructions in terms of the custody. 12. With regard to resolution 8, a Form of Transfer and Surrender is provided which should be completed by holders of certificated shareholders in Kibo and returned to Link Market Services in South Africa (refer address below) together with existing Kibo share certificates and any other documentation stipulated in the form to enable the existing certificates held to be cancelled and replaced with new ones in the name of Kibo Energy Public Limited Company. To be completed and mailed to: Link Market Services South Africa (Pty) Ltd PO Box 4844, Johannesburg 2000 OR To be completed and hand delivered to: Link Market Services South Africa (Pty) Ltd, 13th Floor, 19 Ameshoff Street, Braamfontein OR E-mail: meetfax@linkmarketservices.co.za South African Shareholders should refer to note 12 below for instructions on how they should proceed to receive reissued share certificates in the name of Kibo Energy Public Limited Company (K) Shareholders who hold their Kibo shares in uncertificated form through CREST should expect to see the security description updated for the existing ISIN number (IE00B97C0C31), in order to reflect their holding in Kibo Energy Public Limited Company. SOUTH AFRICAN SHAREHOLDERS Notes to the Form of Proxy 1. A KIBO shareholder may insert the name of a proxy or the names of two alternative proxies of the KIBO shareholder’s choice in the space/s provided, with or without deleting “the Chairperson of the General Meeting”, but any such deletion must be initialled by the KIBO shareholder concerned. The person whose name appears first on the form of proxy and who is present at the Annual General Meeting will be entitled to act as proxy to the exclusion of those whose names follow. 2. 3. 4. Please insert an “X” in the relevant spaces according to how you wish your votes to be cast. However, if you wish to cast your votes in respect of a lesser number of shares than you own in KIBO, insert the number of ordinary shares held in respect of which you desire to vote. Failure to comply with the above will be deemed to authorise the proxy to vote or to abstain from voting at the Annual General Meeting as he/she deems fit in respect of all the shareholder’s votes exercisable thereat. A KIBO shareholder or his/her proxy is not obliged to use all the votes exercisable by the KIBO shareholder or by his/her proxy, but the total of the votes cast and in respect whereof abstentions recorded may not exceed the total of the votes exercisable by the shareholder or by his/her proxy. The date must be filled in on this proxy form when it is signed. The completion and lodging of this form of proxy will not preclude the relevant KIBO shareholder from attending the Annual General Meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof. Where there are joint holders of shares, the vote of the senior joint holder who tenders a vote, as determined by the order in which the names stand in the register of members, will be accepted. 5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the transfer secretaries of KIBO or waived by the Chairperson of the Annual General Meeting of KIBO shareholders. 6. Any alterations or corrections made to this form of proxy must be initialled by the signatory/ies. 7. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by the transfer secretaries of KIBO. 8. 9. Forms of proxy must be received by the transfer secretaries, Link Market Services South Africa (Pty) Ltd, 13th Floor, 19 Ameshoff Street,Braamfontein (PO Box 4844, Johannesburg, 2000) or via email to meetfax@linkmarketservices.co.za by not later than 10 a.m. on the 28th July 2018. The Chairperson of the Annual General Meeting may accept or reject any form of proxy, in his absolute discretion, which is completed other than in accordance with these notes. 10. If required, additional forms of proxy are available from the transfer secretaries of KIBO. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 XXII South African Shareholders should refer to note 12 below for instructions on how they should proceed to receive reissued share certificates in the name of Kibo Energy Public Limited Company (K) Shareholders who hold their Kibo shares in uncertificated form through CREST should expect to see the security description updated for the existing ISIN number (IE00B97C0C31), in order to reflect their holding in Kibo Energy Public Limited Company. SOUTH AFRICAN SHAREHOLDERS Notes to the Form of Proxy 1. A KIBO shareholder may insert the name of a proxy or the names of two alternative proxies of the KIBO shareholder’s choice in the space/s provided, with or without deleting “the Chairperson of the General Meeting”, but any such deletion must be initialled by the KIBO shareholder concerned. The person whose name appears first on the form of proxy and who is present at the Annual General Meeting will be entitled to act as proxy to the exclusion of those whose names follow. 2. Please insert an “X” in the relevant spaces according to how you wish your votes to be cast. However, if you wish to cast your votes in respect of a lesser number of shares than you own in KIBO, insert the number of ordinary shares held in respect of which you desire to vote. Failure to comply with the above will be deemed to authorise the proxy to vote or to abstain from voting at the Annual General Meeting as he/she deems fit in respect of all the shareholder’s votes exercisable thereat. A KIBO shareholder or his/her proxy is not obliged to use all the votes exercisable by the KIBO shareholder or by his/her proxy, but the total of the votes cast and in respect whereof abstentions recorded may not exceed the total of the votes exercisable by the shareholder or by his/her proxy. The date must be filled in on this proxy form when it is signed. 3. 4. The completion and lodging of this form of proxy will not preclude the relevant KIBO shareholder from attending the Annual General Meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof. Where there are joint holders of shares, the vote of the senior joint holder who tenders a vote, as determined by the order in which the names stand in the register of members, will be accepted. 5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the transfer secretaries of KIBO or waived by the Chairperson of the Annual General Meeting of KIBO shareholders. 6. Any alterations or corrections made to this form of proxy must be initialled by the signatory/ies. 7. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by the transfer secretaries of KIBO. 8. Forms of proxy must be received by the transfer secretaries, Link Market Services South Africa (Pty) Ltd, 13th Floor, 19 Ameshoff Street,Braamfontein (PO Box 4844, Johannesburg, 2000) or via email to meetfax@linkmarketservices.co.za by not later than 10 a.m. on the 28th July 2018. 9. The Chairperson of the Annual General Meeting may accept or reject any form of proxy, in his absolute discretion, which is completed other than in accordance with these notes. 10. If required, additional forms of proxy are available from the transfer secretaries of KIBO. 11. Dematerialised shareholders, other than by own name registration, must NOT complete this form of proxy and must provide their CSDP or broker of their voting instructions in terms of the custody. 12. With regard to resolution 8, a Form of Transfer and Surrender is provided which should be completed by holders of certificated shareholders in Kibo and returned to Link Market Services in South Africa (refer address below) together with existing Kibo share certificates and any other documentation stipulated in the form to enable the existing certificates held to be cancelled and replaced with new ones in the name of Kibo Energy Public Limited Company. To be completed and mailed to: Link Market Services South Africa (Pty) Ltd PO Box 4844, Johannesburg 2000 OR To be completed and hand delivered to: Link Market Services South Africa (Pty) Ltd, 13th Floor, 19 Ameshoff Street, Braamfontein OR E-mail: meetfax@linkmarketservices.co.za XXIII KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 6. Persons who have acquired Shares after the 20th June 2018 can obtain copies of the Form of Surrender and Transfer from the Transfer Secretaries, Link Market Services South Africa Proprietary Limited, 13th Floor, 19 Ameshoff Street, Braamfontein (PO Box 4844, Johannesburg, 2000). Dear Sirs PART A: To be completed by all Kibo shareholders HOLDING CERTIFICATED SHARES who are recorded in the Kibo Register on the 20th June 2018 and who return this form I/We hereby surrender the share certificate(s) and/or other Documents of Title attached hereto, representing Shares, registered in the name of the person mentioned below and authorise the Transfer Secretaries, conditional upon the passing of resolution 8 at the Company’s AGM on the 30th July 2018 to register the transfer of these Shares into the name of Kibo Energy Public Limited Company. Name of registered holder Certificate Number(s) Number of Shares covered by (separate form for each holder) each certificate(s) enclosed Address to which the re-issued share certificate should be sent (if different from registered address) Postal Code: Stamp and address of agent lodging this form (if any) Total Surname or name of corporate body First names (in full) Title (Mr, Mrs, Miss, Ms etc) Signature of Certified Shareholder Assisted by me (if applicable) (State full name and capacity) Date Telephone number (Home) Telephone number (Work) Cellphone number PART B: Name of dealer Account number Address of dealer 1. To be completed by emigrants from the Common Monetary Area. Nominated Authorised Dealer in the case of a Certificated Shareholder who is an emigrant from the Common Monetary Area (see note 2 below) Kibo Mining Plc (Incorporated in Ireland) (Registration Number: 451931) (External registration number: 2011/007371/10) Share code on AIM: KIBO Share code on the AltX: KBO ISIN: IE00B97C0C31 “Kibo” or “the Company” __________________________________________________________________________________ FORM OF SURRENDER AND TRANSFER FOR USE BY CERTIFICATED SHAREHOLDERS IN SOUTH AFRICA ONLY ________________________________________________________________ INSTRUCTIONS: HOLDERS OF DEMATERIALISED SHARES MUST NOT COMPLETE THIS FORM OF SURRENDER AND TRANSFER 1. 2. 3. 4. 5. The Form of Surrender and Transfer of Documents of Title is for use only by certificated Kibo shareholders recorded on the Kibo share register (“Kibo Register”) on the 20th June 2018 (“Certificated Shareholders”). A separate Form of Surrender and Transfer is required for each Certificated Shareholder. Part A must be completed by all Certificated Shareholders who return this form. Part B: 4.1 Section 1 must be completed by all Certificated Shareholders who are emigrants from the Common Monetary Area. 4.2 Section 2 must be completed by all other Certificated Shareholders who are non-residents of the Common Monetary Area (and who are not required to complete Section 1 of this Part B). If this Form of Surrender and Transfer is returned with the relevant Documents of Title, it will be treated as a conditional surrender which is made subject to the passing of resolution 8 at the Company’s 2018 AGM on the 30th July 2018 (“the AGM”) to change the name of Company from Kibo Mining Public Limited Company to Kibo Energy Public Limited Company. In the event that resolution 8 is not passed at the AGM the Transfer Secretaries will, by not later than 5 (five) Business Days after the date of the AGM, return the Documents of Title to the relevant Certificated Shareholders concerned, by registered mail, at the risk of such Certificated Shareholders. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 XXIV ✃ (External registration number: 2011/007371/10) Kibo Mining Plc (Incorporated in Ireland) (Registration Number: 451931) Share code on AIM: KIBO Share code on the AltX: KBO ISIN: IE00B97C0C31 “Kibo” or “the Company” __________________________________________________________________________________ FORM OF SURRENDER AND TRANSFER FOR USE BY CERTIFICATED SHAREHOLDERS IN SOUTH AFRICA ONLY ________________________________________________________________ INSTRUCTIONS: HOLDERS OF DEMATERIALISED SHARES MUST NOT COMPLETE THIS FORM OF SURRENDER AND TRANSFER 1. 2. 3. 4. The Form of Surrender and Transfer of Documents of Title is for use only by certificated Kibo shareholders recorded on the Kibo share register (“Kibo Register”) on the 20th June 2018 (“Certificated Shareholders”). A separate Form of Surrender and Transfer is required for each Certificated Shareholder. Part A must be completed by all Certificated Shareholders who return this form. Part B: Common Monetary Area. 4.1 Section 1 must be completed by all Certificated Shareholders who are emigrants from the 4.2 Section 2 must be completed by all other Certificated Shareholders who are non-residents of the Common Monetary Area (and who are not required to complete Section 1 of this Part B). 5. If this Form of Surrender and Transfer is returned with the relevant Documents of Title, it will be treated as a conditional surrender which is made subject to the passing of resolution 8 at the Company’s 2018 AGM on the 30th July 2018 (“the AGM”) to change the name of Company from Kibo Mining Public Limited Company to Kibo Energy Public Limited Company. In the event that resolution 8 is not passed at the AGM the Transfer Secretaries will, by not later than 5 (five) Business Days after the date of the AGM, return the Documents of Title to the relevant Certificated Shareholders concerned, by registered mail, at the risk of such Certificated Shareholders. 6. Persons who have acquired Shares after the 20th June 2018 can obtain copies of the Form of Surrender and Transfer from the Transfer Secretaries, Link Market Services South Africa Proprietary Limited, 13th Floor, 19 Ameshoff Street, Braamfontein (PO Box 4844, Johannesburg, 2000). Dear Sirs PART A: To be completed by all Kibo shareholders HOLDING CERTIFICATED SHARES who are recorded in the Kibo Register on the 20th June 2018 and who return this form I/We hereby surrender the share certificate(s) and/or other Documents of Title attached hereto, representing Shares, registered in the name of the person mentioned below and authorise the Transfer Secretaries, conditional upon the passing of resolution 8 at the Company’s AGM on the 30th July 2018 to register the transfer of these Shares into the name of Kibo Energy Public Limited Company. Name of registered holder (separate form for each holder) Certificate Number(s) Number of Shares covered by each certificate(s) enclosed Total Surname or name of corporate body First names (in full) Title (Mr, Mrs, Miss, Ms etc) Address to which the re-issued share certificate should be sent (if different from registered address) Postal Code: Stamp and address of agent lodging this form (if any) Signature of Certified Shareholder Assisted by me (if applicable) (State full name and capacity) Date Telephone number (Home) Telephone number (Work) Cellphone number PART B: 1. To be completed by emigrants from the Common Monetary Area. Nominated Authorised Dealer in the case of a Certificated Shareholder who is an emigrant from the Common Monetary Area (see note 2 below) Name of dealer Account number Address of dealer ✃ XXV KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 2. To be completed only by all other non-resident shareholders Share certificates will be posted to the registered address of the non-residents concerned, unless written instructions to the contrary are received and an address provided below EXPLANATION OF RESOLUTIONS TO BE PROPOSED AT THE ANNUAL GENERAL MEETING Resolution 1: Financial statements Name of dealer Account number Address of dealer Substitute Address in South Africa In terms of the Financial Intelligence Centre Act, 2001 (Act No. 38 of 2001) requirements, the Transfer Secretaries will only be able to record any changes in address if the undermentioned documentation is received from the relevant Shareholder: • • • an original certified copy of an identity document; an original certified copy of a document issued by the South African Revenue Services to verify your tax number. If you do not have one, please submit this in writing and have the letter signed by a Commissioner of Oaths; and an original or an original certified copy of a service bill to verify your residential address. Instructions: 1. No receipts will be issued for documents lodged unless specifically requested. In compliance with the requirements of the JSE, Lodging Agents are requested to prepare special transaction receipts, if required. Signatories may be called upon for evidence of their authority or capacity to sign this Form of Surrender and Transfer. 2. Any alteration to this Form of Surrender and Transfer must be signed in full and not merely initialled. 3. If this Form of Surrender and Transfer is signed under a power of attorney, then such power of attorney or a notarially certified copy thereof must be sent with this form for noting (unless it has already been noted by Kibo or its Transfer Secretaries at an earlier stage). 4. Where the Certificated Shareholder is a company or a close corporation, unless it has already been registered with Kibo or its Transfer Secretaries at an earlier stage, a certified copy of the directors' or members' resolution authorising the signing of this Form of Surrender and Transfer must be submitted if so requested by Kibo. 5. Instruction 4 above does not apply in the event of this form bearing a JSE broker's stamp. If this Form of Surrender and Transfer is not signed by the Certificated Shareholder, the Certificated Shareholder will be deemed to have irrevocably appointed the Transfer Secretaries of Kibo to implement the Certificated Shareholder's obligations on his/her behalf. 6. Where there are any joint holders of any Certificated Shares, only the holder whose name appears first in the Register in respect of such Certificated Shares, needs to sign this Form of Surrender and Transfer. The Directors will present the financial statements of the Company for the year ended 31 December 2017. A full copy of the Annual Report is available on www.kibomining.com. Resolutions 2 and 3: Re-election of Directors Kibo Mining plc is led by a strong and effective Board of Directors. The performance of the Board is reviewed annually, and each of the Directors has made a substantial contribution to the leadership and governance of the Company during the year and continues to contribute effectively and to demonstrate commitment to Mr Tinus Maree and Mr Wenzel Kerreman are retiring as directors of the Company in accordance with Regulation 84 of the Articles of Association of the Company and being eligible, have offered themselves for The Board is recommending the appointment of Crowe Clarke Whitehill LLP as Auditors. We would like to thank Saffery Champness who have been Auditors of the Company since 2015 for their their respective roles. re-election. Resolution 4: Appointment of Auditors services over the past 3 years. Resolution 5: Auditors’ remuneration 31 December 2018. Resolution 6: Allotment of shares The Directors are seeking to renew their authority to fix the remuneration of the Auditors for the year ending At the Annual General Meeting of the Company held in 2017, shareholders gave the Directors a general authority under Section 1021 of the Companies Act, 2014 to allot shares. That authority will expire at the conclusion of the forthcoming Annual General Meeting. Shareholders are therefore being asked to renew the Directors’ authority to allot shares in the Company. By Resolution 6, the Directors will, at the forthcoming Annual General Meeting, seek authority to issue shares up to a maximum aggregate nominal value equal to the nominal value of the authorised but unissued ordinary share capital of the Company from time to time. The authority will, if renewed, expire at the conclusion of the annual general meeting to be held in 2019. The Directors will exercise this authority only if they consider this to be in the best interests of shareholders generally at that time. Resolution 7: Dis-application of pre-emption rights 7. A minor must be assisted by his/her parent or guardian, unless the relevant documents establishing his/her legal capacity are produced or have been registered by the Transfer Secretaries at an earlier stage. The power given to the Directors at the 2017 Annual General Meeting to allot shares for cash otherwise than in accordance with statutory pre-emption rights also expires at the conclusion of the forthcoming Annual General Meeting. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 XXVI EXPLANATION OF RESOLUTIONS TO BE PROPOSED AT THE ANNUAL GENERAL MEETING Resolution 1: Financial statements The Directors will present the financial statements of the Company for the year ended 31 December 2017. A full copy of the Annual Report is available on www.kibomining.com. Resolutions 2 and 3: Re-election of Directors Kibo Mining plc is led by a strong and effective Board of Directors. The performance of the Board is reviewed annually, and each of the Directors has made a substantial contribution to the leadership and governance of the Company during the year and continues to contribute effectively and to demonstrate commitment to their respective roles. Mr Tinus Maree and Mr Wenzel Kerreman are retiring as directors of the Company in accordance with Regulation 84 of the Articles of Association of the Company and being eligible, have offered themselves for re-election. Resolution 4: Appointment of Auditors The Board is recommending the appointment of Crowe Clarke Whitehill LLP as Auditors. We would like to thank Saffery Champness who have been Auditors of the Company since 2015 for their services over the past 3 years. Resolution 5: Auditors’ remuneration The Directors are seeking to renew their authority to fix the remuneration of the Auditors for the year ending 31 December 2018. Resolution 6: Allotment of shares At the Annual General Meeting of the Company held in 2017, shareholders gave the Directors a general authority under Section 1021 of the Companies Act, 2014 to allot shares. That authority will expire at the conclusion of the forthcoming Annual General Meeting. Shareholders are therefore being asked to renew the Directors’ authority to allot shares in the Company. By Resolution 6, the Directors will, at the forthcoming Annual General Meeting, seek authority to issue shares up to a maximum aggregate nominal value equal to the nominal value of the authorised but unissued ordinary share capital of the Company from time to time. The authority will, if renewed, expire at the conclusion of the annual general meeting to be held in 2019. The Directors will exercise this authority only if they consider this to be in the best interests of shareholders generally at that time. Resolution 7: Dis-application of pre-emption rights The power given to the Directors at the 2017 Annual General Meeting to allot shares for cash otherwise than in accordance with statutory pre-emption rights also expires at the conclusion of the forthcoming Annual General Meeting. XXVII KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 Shareholders are therefore also being asked to renew, until the Annual General Meeting to be held in 2019, the Directors’ authority to allot shares for cash otherwise than in accordance with statutory pre- emption provisions in the event of a rights issue or in respect of any other issue of equity securities for cash up to a maximum aggregate nominal value equal to the nominal value of the authorised but unissued ordinary share capital of the Company from time to time. The Directors will exercise this authority only if they consider this to be in the best interests of shareholders generally at that time. Resolution 8: Change of Name Subject to the approval of the Registrar of Companies, the Directors are seeking to change the name of the Company to Kibo Energy Public Limited Company. Resolution 9: Amendments to the Memorandum and Articles of Association Subject to passing of Resolution 8, the Directors are seeking approval to change the relevant provisions of the Memorandum and Articles of Association of the Company to reflect the proposed change of name. KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 XXVIII Shareholders are therefore also being asked to renew, until the Annual General Meeting to be held in 2019, the Directors’ authority to allot shares for cash otherwise than in accordance with statutory pre- emption provisions in the event of a rights issue or in respect of any other issue of equity securities for cash up to a maximum aggregate nominal value equal to the nominal value of the authorised but unissued ordinary share capital of the Company from time to time. The Directors will exercise this authority only if they consider this to be in the best interests of shareholders generally at that time. Resolution 8: Change of Name Subject to the approval of the Registrar of Companies, the Directors are seeking to change the name of the Company to Kibo Energy Public Limited Company. Resolution 9: Amendments to the Memorandum and Articles of Association Subject to passing of Resolution 8, the Directors are seeking approval to change the relevant provisions of the Memorandum and Articles of Association of the Company to reflect the proposed change of name. noteS: XXIX KIBO MInIng PLC AnnuAL RePORt And ACCOunts 2017 tARget pRogRAmme foR 2018/2019 KIBO MINING PLC MCPP • Finalisation of Power Purchase Agreement with TANESCO which will mark the last major step on the development plan prior to the commencement of Financial Close • Complete Financial Close on the project to enable construction to commence which is estimated to take 36 months from the start of construction to completion MCiPP • Complete Integrated Bankable Feasibility Study HaneTi • Continue to seek and evaluate JV proposals and other funding options that will allow the first stage of drilling on the project to proceed KatOrO GOLd PLC iMweru & lubando • Complete Definitive Mining Feasibility Study which is currently at an advanced stage • Complete Financial Close on the project • Construct mine and commence gold production • Implement drill programmes for resource update at Lubando and for regional exploration over other licences within the Imweru and Lubando project blocks CorPoraTe • Complete steps to transform Kibo into a strategic regional electricity producer Classroom handover ceremony - Songwe Region March 2017 9 3 7 1 2 7 7 6 5 0 : s r e t n i r P n r e d o M y b t n i r P d n a n g i s e D Coal Fired Power Station Werdohl Elverlingsen Germany (Dr.G.Schmitz) 

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